Hotels Won’t Recover From Covid-19 Until Summer

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Hoteliers will have to wait until the end of the year before they begin to see a recovery in business, according to a new report.

Photo: 123RF

The New Zealand Hotel Market Snapshot from property research firm Colliers International suggests hoteliers still face a tough three to six months before they start to see some semblance of pre-Covid-19 activity.

National manager of Colliers Hotels Dean Humphries said the opening of the border to international visitors from countries that do not require visas next week was “great” news for the industry.

However, he said the country’s tourism sector was seasonal, meaning the economic benefits of reopening will not be felt until next summer.

“With the exception of Queenstown which will benefit from a strong winter season, the wider market could therefore face another three to six months of headwinds before a real recovery is seen.

Some operators will find conditions more difficult over the next three months as hotels previously contracted by the government as managed isolation facilities are brought back on the market.

At its peak, there were 32 MIQ facilities across the country and all but four would be converted into regular hotels.

“There will be a period in the third quarter where demand will definitely be weak given that it is off season and there will be a lot of new inventory on the market.”

Humphries said he thinks consumers could get good hotel deals between July and September as supply outstrips demand.

But that would soon end around October, when he expected international visitors to return to New Zealand.

He said the 2022/2023 summer season is shaping up to be positive based on upcoming inquiries and bookings.

Quarterly overview

Colliers’ report for the three months to March showed a slight increase in performance for hotels in Rotorua, Wellington, Christchurch and Queenstown compared to the previous year.

Hotels in these regions saw increases in occupancy rates, average revenue per room (RevPAR) and average daily rates (ADR).

Auckland hotels saw higher vacancy levels and lower RevPAR, but this was largely attributed to the disproportionate effects the Omicron outbreak had on the city.

More hotels are expected to hit the market

Humphries said the phasing out of border restrictions would likely see more hotels put up for sale now that investors could actively review those assets.

“New Zealand remains a very attractive market for people looking to allocate offshore capital due to its transparent legal system, geopolitical status and strong relationships with major global economies, all of which present themselves as strengths. notable,” he said.

Since large hotels rarely come on the market, this could lead to a wave of demand from investors keen to secure assets in New Zealand, he said.

“Conversely, some suppliers are now weighing their options to recycle capital or rebalance their portfolios after the difficult period that Covid-19 has put hoteliers through.”

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