New Zealand hotel supply struggling to meet tourism demand

Cordis Auckland, New Zealand. Photo credit: Langham Hospitality Group(Image: Langham Hospitality Group)

A drop in new hotel supply is keeping New Zealand from reaching its tourism boom, according to a report from Colliers International.

New Zealand's hotel industry is struggling to add more rooms inventory in key tourism regions, although the country recorded 3.7 million international visitors last year.

“The economic cost to the country from not having these new hotels available over the past five years has been substantial,” Dean Humphries, national director of hotels and tourism at Colliers International, said in a statement. “It is hard to believe that we have seen virtually no net addition to our hotel inventory this decade, despite almost 1.5 million additional tourists visiting New Zealand. In Auckland, our gateway city, we have seen a mere 526 rooms added to the hotel stock since 2013. It’s even worse in Queenstown, where we have only seen 158 new rooms.”

New Zealand is still struggling to build the new hotels it needs in both the private and public sector.

“Fortunately, a number of new hotels are now under construction, and the pipeline of mooted projects is growing, particularly in Auckland. However, the big question on everyone's minds is when, and if, they will be completed,” Humphries said in a statement.

The market is facing significant pressure to open these hotels in time for the opening of the New Zealand International Convention Centre in 2019 along with the America’s Cup and APEC in 2020 and 2021. The NZICC is expected to attract about 33,000 delegates a year while the America’s Cup is expected to attract between 150,000 to 175,000 international visitors. APEC is predicted to attract 22,000 attendees, including 10,000 for the summit week.

Tourist numbers are expected to continue breaking records after these events. The Ministry of Business, Innovation and Employment estimates New Zealand will welcome 5 million international visitors by 2024.

A recent New Zealand Trade and Enterprise study found Auckland will need up to 4,000 new guestrooms by 2025 to meet the demand.

“We really need new supply but delivery is very slow, with the majority of new hotel stock not expected until post-2021,” Humphries said in a statement.