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ANNUAL REPORT 2014
MARKET REVIEW
Auckland, New Zealand
Hotel Property Sector as of 1 March 2015
AUCKLAND TOURISM MARKET
Auckland is the gateway to New Zealand and is the country's
most visited destination. Auckland International Airport has
in recent years welcomed around 71% of all visitors to the
country. In 2014, the city reached a landmark of 2 million
visitor arrivals in a calendar year, up 5.0% from 2013.
Auckland has in recent years become a well-regarded
international tourist destination, as demonstrated by a
consistent growth in annual guest nights with international
guest nights in 2014 topping 3 million for the first time. Visitor
arrivals to Auckland since 2010 have been driven primarily by
growth in the Chinese market, with annual arrivals increasing
at an average rate of 21% per annum to reach circa 240,000
in 2014. ATEED, Auckland's economic growth agency, has
forecast the Auckland tourism sector to grow at an average
rate of 4.6% per annum from an annual value of NZ$4.83
billion in 2012 to NZ$7.23 billion by 2021 on the back of
strong growth in visitor arrivals.
HOTEL MARKET PERFORMANCE
The Auckland hotel market is predominantly characterised by
contribution from FIT (45%), Corporate (23%), and the Tours
business (14%). ADR for 2014 increased to NZ$147.46, a 5.1%
increase from 2013, primarily driven by strong improvements
in core business segments such as FIT and Tours which
recorded gains of 6.4% and 6.5% respectively.
Occupancy rates in the 3-5 star Auckland hotel market have
witnessed continual improvements since 2009 with a spike due
to the Rugby World Cup occurring in 2011. Occupancy rates
for Auckland have improved to 82.2% for 2014, a historic high.
ADR also recorded similar growth over this period, increasing
to NZ$147.46 for 2014. As a result of improvements in both
occupancy and ADR, the RevPAR for the 3-5 star Auckland
hotel market recorded increases of 7.3% and 9.7% in 2013
and 2014 respectively, culminating in a RevPAR of NZ$121.21
for 2014.
EXISTING AND FUTURE HOTEL SUPPLY
As at 2014, the Auckland hotel market (hotels over 50 rooms
of three to five star standard) comprised 60 hotels providing
an inventory of approximately 9,700 guest rooms.
The majority of Auckland's hotel stock is located within the
CBD area with the remainder distributed primarily around
the city fringe and the Auckland Airport Precinct. In terms
of quality, Auckland has a large number of three to four star
hotel rooms (59% of total stock), which is consistent with the
core business segments serviced.
Looking ahead, the Auckland hotel market has been
witnessing renewed interest in hotel development due to
factors such as improving economic and tourism conditions,
revitalisation of the Auckland waterfront, the announcement
of the proposed National Convention Centre, limited quality
investment opportunities, and demand from operators
looking to enter into or consolidate existing market share
within Auckland. However we note generally the replacement
cost of hotels remains above their market values.
Current notable proposed and mooted projects include:
• Conversion of old Reserve Bank building to 130 room
Sofitel So on Customs Street (opening delayed to 2016);
• Proposed development of 200 room Park Hyatt at
Wynyard Quarter (forecast to open in 2017);
• Refurbishment of the 188 roomCopthorneHotel Auckland
Harbour City to a new Millennium Hotel (forecast to
re-open in 2016);
• Mooted 302 room Ritz-Carlton to be constructed as part
of a mixed-use complex on the corner of Victoria Street
West and Albert Street (forecast to be completed in
2020); and
• Mooted 300 room hotel to be built in conjunction with
the proposed National Convention Centre (opening date
has not been announced).
Most of these projects are currently in early planning stages
and are not anticipated to add to market inventory in the
short term.
HOTEL MARKET OUTLOOK
The Auckland hotel market is currently performing at
historically high trading levels primarily due to improving
economic and tourism fundamentals, Auckland receiving
recognition as an international tourist destination, and an
improving annual events calendar.
These factors, in conjunction with limited forecast new supply
in the short to medium term, are expected to culminate in a
positive outlook for the short to medium term demonstrated
by further improvements in hotel occupancy and room rates.
