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NZHIC 2018: New Zealand market positive, says Horwath’s Stephen Hamilton

Top speaker at NZHIC: Katie Milne

By Stephen Hamilton at NZHIC in Auckland

There was a high degree of positivity in the air at the New Zealand Hotel Industry Conference (NZHIC) held at The Cordis, Auckland, on Thursday 5th July.

Most hoteliers expect the strong performance of the industry to carry on into the foreseeable future, with new rooms which will open in the coming year being easily absorbed by the market.

Keynote speeches given by Christopher Luxon (CEO, Air New Zealand) and Todd Wynne-Parry (Vice President, Global Acquisitions and Development, Two Roads Hospitality) emphasised the importance of new hotel rooms meeting the quality expectations of international guests, highlighting opportunities in the luxury segment in particular.

Some panellists raised a flag that there is an apparent mismatch between the high proportion of 5-star / luxury product in the development pipeline, compared to the majority of international visitors preferring more affordable midscale to upscale accommodation.

Air New Zealand CEO Christopher Luxon

There were mixed views expressed about whether average hotel occupancies and room rates would continue to rise in all main centres as new hotel rooms come onstream in the next few years.

Horwath HTL has a relatively cautious view about the outlook. This is because of the continuing impact of seasonality of demand being a major factor in several key markets (although less so in Auckland and Queenstown). As more rooms open, they will be easily absorbed during the peak season, with relatively high room rates being achieved. But this won’t be the case for more than 6 months in each year in most New Zealand centres.

Developers, investors and lenders need to be cautious and ensure that, in providing new rooms for the peak season, they don’t inadvertently end up creating an oversupply for the majority of the year.

Stephen Hamilton is a Director of Horwath HTL New Zealand, co-organisers of NZHIC.

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