New Zealand hotels face a challenging winter as domestic travel declines, with RevPAR dropping by 11.5% in June and occupancy hitting a low of 58%.
In June, revenue per available room (RevPAR) for major New Zealand hotels dropped by 11.5% compared to the previous year, returning to June 2019 levels, according to data reported by Hotel Data New Zealand (HDNZ).
Occupancy fell to 58%, the lowest since July 2022 before New Zealand fully reopened its borders. The Average Daily Rate (ADR) decreased by 5.6% year-on year.
Domestic Decline
Hotels reported an 11% decline in rooms occupied by New Zealanders, who typically account for about three quarters of total hotel occupancies at this time of year.
While the lower average rate might be beneficial for consumers and economists, many hotels are cutting payroll and other costs to manage the reduced demand and avoid cash flow issues.
The decline in domestic demand was too significant to be offset by international visitors, though there were some positive signs of recovery in international arrivals. Non-New Zealand resident arrivals increased by 2% year-on-year, reaching 88% of pre-COVID levels.
Visitors From China
Arrivals from China reached 86% of 2019 levels, while those from Australia reached 90%. Hotels reported a 17% increase in rooms occupied by international guests, totalling approximately 33,000 rooms, with about 13,000 occupied by residents from China. This highlights the importance of the Chinese market, especially during the off-season.
Auckland and Wellington hotels experienced the most significant declines, with RevPAR dropping by 14.9% and 14.1%, respectively.
For Auckland hotels, this was 9% below June 2019 levels, following an additional supply of approximately 900 rooms (6.5%) over the past 12 months. The increased supply, planned before COVID-19 and in anticipation of the NZICC opening, has heavily impacted Auckland hotels due to ongoing NZICC delays and a lack of major events during the winter months.
In Christchurch, RevPAR fell below 2023 levels for the first time this year, with a 5% decline in room nights sold and a 3% decline in the ADR. This includes a significant drop in conference-related business, which had been a strong contributor since the opening of Te Pae.
Wellington’s ADR dropped by 9.1%, bringing the year-to-date decline to 8.5%, driven by weaker government related business, increasing competition in other market segments.
Nelson and Marlborough was the only region reporting a RevPAR increase, attributed to improved meeting and conference business, which boosted both occupancies and the average daily rate.
Focus On Recovery
Amid the focus on the recovery of international markets in the tourism sector, June serves as a strong reminder of the importance of the domestic economy for New Zealand hotels. It also highlights the need for more events and marketing of tourism product that attract both domestic and international visitors during the winter months.
For a quick yet comprehensive analysis of the trends and challenges faced by hotels across various markets, click here
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