Regional New Zealand hotel sales keep pace as demand for assets remains strong

The 51-room Quality Hotel Ambassador is part of the Choice Hotels system.

Demand for regional hotels is on the rise following a record number of hotel sales in New Zealand's main tourism markets, commercial real estate company Colliers reports. 

Dean Humphries, national director of hotels for Colliers International, said the recent sale of two large regional hotels follows more than $500 million of hotels that changed hands in 2015/16. This was the strongest period on record in a decade.

An Australian investor has purchased the 51-room Quality Hotel Ambassador in Hamilton. Humphries said in a statement that the Ambassador–one of Hamilton's most well-known accommodation providers–is the second hotel the Australian investor had purchased in the last 12 months. Humphries explained, “They see Hamilton as a key growth region both due to its status as a satellite city to Auckland and as an emerging tourist destination.”

Meanwhile, an Auckland investor has bought the 82-room Park Hotel Ruapehu in the central North Island’s National Park. The Park Hotel Ruapehu is one of the region’s largest commercial accommodation providers. It is close to the Tongariro Crossing and Whakapapa ski fields. Humphries said, “The new owner from Auckland plans to immediately complete the remaining room renovations to the property in time for the winter ski season.”

Humphries said that investors are seeking higher returning investments in emerging tourism markets, which is driving up enquiry levels for regional hotels. “These hotels can still be purchased well below current replacement cost and at attractive yields returning up to 10 percent on current net cash flows,” he said.

Humphries added that other emerging hot spots include Hawke’s Bay, Taupo, Tauranga, Nelson and Dunedin. “Investors have high levels of confidence in New Zealand’s hotel sector, thanks to favorable trading conditions and the huge economic benefits of the country’s ongoing tourism boom,” he said. A record 3.5 million visitors came to New Zealand last year. The government is forecasting 4.9 million annual visitors by 2023.