In Auckland, New Zealand, hotel room supply is declining while demand is growing. This, according to Colliers International, is putting the entire country's tourism growth trajectory at risk.
This is especially bad news since New Zealand had its best-ever tourism year in 2016 with 3.5 million visitors. With that number poised to reach 4.5 million by 2022, "we simply don't have enough hotel rooms in our current inventory to cope with this level of growth in the tourism sector," Colliers International National Director Hotels Dean Humphries told the New Zealand Herald.
Auckland is in particularly dire straits as the city's room count dropped by 300 over the past two years, falling from 9,500 to 9,200. In addition, some hotels have temporarily closed for refurbishment while as many as 500 serviced apartments were taken out of the hospitality pool by private investors and home-buyers.
While Humphries said that the city has about 1,300 rooms in the pipeline scheduled to open by 2020, it needs another 3,000 on top of that to keep up with the growing demand. "If immediate solutions are not found, it is unlikely we will continue to grow at current levels," he said.
Barriers to development, he said, include "high construction costs, the increasing level of difficulty in acquiring adequate development funding, challenges in securing suitable sites, and a general lack of sector experience and knowledge." At the same time, the proposed "targeted rate" proposed by Auckland mayor Phil Goff will "almost certainly act as a deterrent for new developments moving forward," Humphries said.