AUCKLAND, NEW ZEALAND
HOTEL PROPERTY SECTOR
as of 1 March 2016
AUCKLAND TOURISM MARKET
Auckland is the main commercial centre of New Zealand with
the largest population of some 1.4 million people. It is also
the main gateway city for international arrivals; Auckland
Airport handles approximately 70% of all international
visitor arrivals to the country.
In the year to December 2015, there were 16.34 million
passenger movements at the airport, an increase of 6.5% on
the previous year. Some 55% of all passenger movements at
Auckland Airport are through the international terminal.
The majority of guests to Auckland hotels are sourced
domestically (59%) with Australia and China providing 12% and
7% respectively. The Chinese market contribution has grown
substantially over the last five years, in 2010, Chinese guests
made up 3% of demand while Australia guests made up 18%.
HOTEL MARKET PERFORMANCE
The Auckland hotel market is primarily driven by the FIT
segment which contributes some 48% of all room demand
followed by the Corporate and Tour segments which
contribute 21% and 14% respectively.
Occupancy levels in Auckland have shown significant growth
in recent years as a result of increased demand coupled
with limited new supply. In 2015 the Auckland hotel market
achieved an occupancy level of 84% up from 82.2% in 2014.
Citywide ADR was NZ$164.22 equating to an increase of
11.4% over the previous year. As a result, of the increases
in occupancy and ADR, RevPAR for the city increased by
13.8% to NZ$138.02.
EXISTING AND FUTURE HOTEL SUPPLY
Based on CBRE’s survey of Auckland hotels there are
currently a total of 64 hotels across the city with some 8,917
rooms. The majority of the hotel stock is located in the CBD
with a number of hotels situated in the Airport precinct.
There has been a significant level of media attention relating
to the performance of the tourism and hotel market over
recent years which has led to a number of hotel developments
being considered. In the current economic climate, in most
instances, new hotel development feasibility is questionable
due primarily to the combination of ‘soft’ average room
rates and high cost of construction.
In saying this however, there are currently a number of
hotels proposed in Auckland. Significant projects currently
planned for Auckland include:
• Copthorne Hotel HarbourCity – The Copthorne Hotel
HarbourCity on Quay Street is currently undergoing a
refurbishment reportedly costing NZ$30 million. The
hotel will be converted to the group’s 4-star Millennium
brand and three additional rooms will be built. The hotel
will be closed for the refurbishment until early 2017.
• So by Sofitel – This comprises the conversion of a former
office building on Commerce Street within the Britomart
precinct. The hotel will have 130 rooms of a 5-star
standard and primarily target high-end leisure business.
Construction has begun on site however the project has
stalled a number of times and ultimate timing of delivery
is difficult to ascertain.
• Park Hyatt Wynyard Quarter – The 196-room Park
Hyatt Wynyard Quarter has recently obtained resource
consent from Auckland Council. The hotel will occupy
a prime waterfront site in Wynyard Quarter and the
cost of construction is rumoured to be around NZ$200
million. Construction has begun on site and the hotel is
expected to open in mid to late 2017.
• SkyCity Hotel – As part of the construction of the New
Zealand International Convention Centre, SkyCity have
received resource consent for the construction of a
300-room 5-star hotel adjoining the centre. Investors are
currently being sought to complete the development of
the hotel.
• 1 Mills Lane – Mansons have proposed the development
of a 175-room 5-star hotel as part of a mixed use office
and hotel development on a site on the corner of Albert
Street and Mills Lane. It is currently unknown if this
development will proceed due to the overall scale of the
proposed development.
• Ritz Carlton – Chinese developer NDG has resource
consent for the construction of a 52-level residential and
hotel tower on Elliot Street near SkyCity. If constructed,
this will be the second largest building in New Zealand
behind the SkyTower. It is understood that the developer
plans to include a 266-room Ritz Carlton hotel within
the tower. This site has been vacant since 1987 and a
number of proposals have been associated with it since.
The latest reports on the site suggested a completion
date of 2020, however the current status of the building
is unknown.
HOTEL MARKET OUTLOOK
We expect the Auckland hotel market to continue to
experience strong demand growth and this combined with
limited increases in supply should result in a positive outlook
for hoteliers in the medium term.
ATEED (Auckland Tourism, Events and Economic Development)
have recently announced a new initiative to drive conference
and meeting related business targeting growth of 8.2%
in international conference related business as well as
‘flattening’ the seasonality patterns through conferences
and events held in the shoulder and low seasons. The
Ministry of Business, Innovation and Employment (MBIE) are
also forecasting international visitor days to New Zealand
to increase by an average of 6.2% per annum for the next
five years.
In addition to the demand increases, we expect ADRs in
Auckland to benefit from the proposed development of
new 5-star hotels in the CBD, together with the benefit from
a higher proportion of conference guests who generally pay
higher rates.
MARKET REVIEW
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