An increase in international visitors, strong economic growth and lack of supply has helped fuel a surge in hotel occupancy and room rates, according to new research by the real estate firm CBRE.

Nationwide hotels achieved an occupancy rate of 80.9 percent in the year to June 2017, with average daily rates (ADR) up 11.7 percent to $182.63 and a key indicator of commercial performance – Revenue Per Available Room (RevPAR) – increasing by 12.3 percent, according to the report.

It comes as New Zealand experienced a 10.2 percent increase of international visitor arrivals in the last year with many staying for longer. The research also indicates a recent influx in Chinese visitors is plateauing while there’s been a 26 percent increase in visitors from USA as a result of increased air capacity across the Pacific.

Peter Hamilton, director of hotels and leisure at CBRE New Zealand said the strong growth in recent years has been great for the industry and when looking across a 10-year period, it’s clear to see when the trend began, but how sustainable it is another matter.

“If we look to the data in the first half of the decade post GFC we see a general theme in term of a decline in ADRs for Auckland, Rotorua, Wellington, Christchurch and Queenstown,” he said. “2011 seems to be a key year for the market with the Rugby World Cup and the Christchurch earthquake in their own way helping to trigger a surge in occupancy and rates witnessed in recent years. It’s clear though that we’re coming to the peak of this recent trend, with some regions there already, with future sustained growth reliant on new stock to keep pace with the demand."


In Auckland, the report notes occupancy nearing 95 percent up from around 76 percent five years ago with ADR also increasing significantly from around $140 post Rugby World Cup to $200 in June this year.

Peter Hamilton said this has flowed through to increasing RevPAR with the current sustained growth being fuelled by increases in international travel for tourism and events like the Lions Tour and World Masters Games, combined with the general economic buoyancy encouraging domestic travel.

“In Auckland in recent years it’s been all about hotels being effectively full on regular occasions and future occupancy growth potential appears to be limited. With new stock expected in coming years , there is a real possibility for occupancy to plateau or decrease and further ADR growth will depend on hoteliers’ ability to hold strong on room rates in the face of increasing competition.”


Rotorua hotels have enjoyed occupancy close to 80 percent in the last two years in a market which is usually dependent on summer months to drive visitation but recently also benefiting from increased visitation in the low season, according to the report.

Hamilton said that like Auckland with the occupancy rate reaching capacity during the high season due to a lack of supply, there is likely to be corresponding impact on revenue in the Rotorua market.

“While rate growth has been strong over recent years, the recent drop in occupancy may result in a subsequent retraction in growth rates of ADRs. This could be offset by a new 130 room 5-star Pullman hotel recently announced for Rotorua which would increase hotel supply by 8.4 percent but also increase the overall quality of hotel stock in the market.”


In a market that is more dependent on domestic Free Independent Travellers (FITs) and the corporate sector, much of the improved occupancy and ADR rates in Wellington recently is seen as being linked to broader economic growth which translates into increased business travel. Hamilton said similarly to Rotorua, the growth in Wellington RevPAR peaked about a year ago when the increasing occupancy trend lost momentum.

“With new supply planned for 2018 as well as currently closed hotels reopening it is expected that the RevPAR growth will decrease further due to occupancy declines.”


The hotel market in Christchurch is still feeling the impacts of the 2011 earthquakes which initially led to a sharp increase in occupancy due to loss of stock and increased accommodation needs as part of the rebuild but more recently has seen occupancy rates decreasing as more stock has become available.

Hamilton said while the current state of the market is flat with uncertain future demand and supply, projects like the convention centre due to be completed by the end of 2019 as well as the overall city rebuild, are expected to substantially increase the demand.



Queenstown has experienced strong occupancy and room rate growth in recent years, with ADR increasing from below $150 in June 2012 to $210 ADR in June this year. This is underpinned by the level of international visitors to what is positioned as the country’s tourism mecca.

“Queenstown attracts the highest proportion of international demand, which tends to experience greater price elasticity than domestic demand sources. Not surprising then that the growth in ADR comes at the same time Queenstown airport has had an upgrade allowing for night flights and substantial increases in arrivals, especially from Australia.”

Hamilton said with the occupancy level peaking in June 2016, the current ADR growth rates in Queenstown aren’t expected to last and recent RevPAR growth rates in excess of 20% p.a. are unlikely to continue.