Colliers International New Zealand Hotel Market 2020 Review
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Colliers International New Zealand Hotel Market 2020 Review
National Director Hotels, Colliers International Dean Humphries told WILLIAMS MEDIA “Despite the many challenges the wider hotel industry is facing with Covid-19, robust investor demand remains for prime strategic accommodation assets, with contracts being exchanged on two significant hotel assets Q4 2020.”
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Colliers InternationalNational Director Hotels, Colliers International Dean Humphries told WILLIAMS MEDIA “Despite the many challenges the wider hotel industry is facing with Covid-19, robust investor demand remains for prime strategic accommodation assets, with contracts being exchanged on two significant hotel assets Q4 2020.”
The absence of virtually all international demand since March 2020 resulted in occupancy levels declining significantly across all key regions. However, hotel room rates showed real resilience, supported by government contracted mandatory isolation business as well as the domestic leisure and corporate sectors.
National Director Hotels, Colliers International Dean Humphries told WILLIAMS MEDIA “Despite the many challenges the wider hotel industry is facing with Covid-19, robust investor demand remains for prime strategic accommodation assets, with contracts being exchanged on two significant hotel assets Q4 2020.”
“Whilst we continue to live in challenging times, the NZ hotel sector ended up being one of the best performing markets in the world last year.”
“With our boarders still closed to international tourists, Domestic Leisure remains buoyant with Corporate/MICE on the increase & most MIQ facilities now looking as though they could remain in place for much of 2021.”
“A Trans-Tasman bi-lateral travel pathway should also greatly assist a range of regions around the country when this commences.”
“2021 is now starting to look like it will display many of the same trends as in 2020, albeit the range of vaccines now being distributed globally, will enable international travel to recommence at some point in the not too distant future.” Said Dean Humphries.
Mandatory Isolation Hotels:
NZ has witnessed a significant number of returning New Zealand citizens and residents throughout 2020, all of whom are subject to a mandatory 14-day isolation period in a government approved hotel facility. This has acted as a
robust demand driver for a number of hotels across the country, with 32 hotels accounting for approximately 6,500 rooms currently being utilised for this purpose. This represents over 30% of the total hotel inventory in the main centres of the country. We anticipate this demand will continue throughout 2021.
Domestic Leisure:
NZ has witnessed sound domestic leisure demand, particularly over weekend and holiday periods. With New Zealand’s borders closed and outbound travel restricted, this welcomed pent up demand from the domestic market is helping offset some of the international demand in many regions of the country with domestic monthly room nights occupied in many cases between 10% to 40% above the equivalent periods in 2019.
Corporate, MICE & Special Events:
Other NZ demand drivers include the Government allowing for an increasing number of special exemption visas for essential workers, sporting teams and other participants in our key economic sectors. This includes the Avatar II production crew and America’s Cup syndicates as two examples.
We are also seeing the re-emergence of Corporate & MICE business throughout the country as mass gatherings have been reinstated throughout most of the country.
Colliers report Summary:
Despite the many challenges the wider hotel industry is facing with Covid-19, there remains robust demand from a range of investors seeking prime strategic accommodation assets in the key tourism regions of New Zealand. Hotel investors have long-term investment objectives in the knowledge there are always cycles in the market. Furthermore, investment yields for hotels have not firmed like many other asset classes in recent times, despite the OCR, 10- year Government bonds and the wider cost of capital falling by over 150 basis points in the past 12 months. This increased yield spread continues to make hospitality assets a compelling medium/ long term strategy for many investors. However, if investors wish to secure prime strategic real estate, they will need to meet the expectations of the vendors regardless of where we are in the cycle.
Click here to view and download the Report.
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