The Colliers International Hotel Market Snapshot April 2018 has indicated Queenstown recording a 19.7% increase in RevPAR for the YE March 2018 with Auckland at 11.4% and Rotorua 8.4%.

"Many of New Zealand's markets are now outperforming key regions in Australia, with Queenstown and Auckland ranking first and second respectively in RevPAR growth over the past 12 months across Australasia."

This begs the question, why is New Zealand continuing to perform so strongly?

Dean Humphries, Colliers International National Director of Hotels states the answer is a relatively simple one - demand is outweighing supply.

"Our country continues to have a shortage of hotel inventory in key regions, with minimal new stock entering the market in recent times. In the past 12 months, we have seen 6 projects completed corresponding to a 3.1% increase in total supply. This compares to international visitation numbers which grew at 6.5% for the 12 months ending February 2018 to reach 3.78 million."

"Whilst we continue to see an increasing number of proposed projects on the drawing boards, we have seen very few new projects commence construction in the past 12 months. This will result in limited new hotels being delivered until post 2021 (other than those already under construction)."

"The recent announcement of New Zealand's largest construction company suffering record losses, and advising they will no longer partake in any new vertical constriction projects; is another critical factor in the challenge of delivering new hotel development moving forward. This will no doubt have an impact on the timing and delivery of new projects over the short/medium term."

"In the meantime, the NZICC, which will open in late 2019, has secured a growing number of large conferences, which will create even more stress on existing hotel inventory until more stock is built."

"On the transaction front, there were no major hotel sales recorded in 2017 as owners elected to hold onto their assets."

"Fortunately, we have a number of large hotels currently in the market including the 203 room Holiday Inn Rotorua and the 165 unit Waldorf Stadium Apartments, Auckland. Both properties have received significant interest from domestic and offshore investors. This will test the current views on hotel yields and values once sales are concluded on these assets."

Click here to view the full Colliers International Hotel Market Snapshot April 2018.

To discuss the New Zealand hotel market in further detail phone or email Dean Humphries via the below contact details.

See also:

Investors circling Auckland CBD's Waldorf Hotel

Naumi Hotels purchase two Wellington hotels

Major New Zealand luxury hotel on the market