Over the 2015/16 period, the New Zealand hotel market has witnessed its most buoyant period of transactional activity since 2005/06 with twenty four (24) hotels* totalling in excess of $500 million changing hands.

The New Zealand Hotel Sales Report March 2017 prepared by the Colliers International Hotel division details the major sales that have taken place over this period.

33% of the total sales volume was recorded in Queenstown, with nine (9) hotels transacted over the 24 month period, totalling some $173 million. This was followed by five (5) hotels, totalling some $133 million sold in Wellington (26% of the total sales volume for 2015/16).

2015/16 saw the largest single hotel transaction in the past decade with the 273-room Novotel Lakeside Queenstown exchanging hands for $91 million.

New Zealand based investors accounted for circa $200 million or 39% of all hotel transactions by value over the 2015/16 period. This was closely followed by capital originating from Hong Kong (30%) and Singapore (18%).

Circa two-thirds (65%) of hotel transactions by value recorded during the 2015/16 period were completed on market via a competitive bidding process. Hotel sales completed by Colliers International accounted for approximately 94% of the agency-brokered transactions (by value) over this period.

Over the past 24 months, the market has witnessed a compression in investment yields in the order of 100 to 200 basis points across the five main tourism markets, with the strongest yields being achieved in Auckland and Queenstown.

Sales activity is likely to be significantly reduced in 2017 with investors choosing to hold onto assets to take advantage of the strong trading conditions.

Hotel development activity is on the rise driven by the prospect of strong future trading patterns and a lack of existing stock available on the market, with the majority of development activity set to occur in Auckland, Christchurch, Queenstown and Wellington.

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