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AUCKLAND, NEW ZEALAND
HOTEL PROPERTY SECTOR
MARKET REVIEW
As of 1 March 2017
AUCKLAND TOURISM MARKET
International visitation has continued to improve in 2016
with a record high of 3.5 million total visitor arrivals to New
Zealand in the year 2016. This was an increase of 11.8% from
the previous year. There was strong growth in all of the key
geographic source markets. In particular, visitor arrivals from
China increased by 14.9% or 53,104 visitors while visitor
arrivals from Australia increased by 6.2% or 82,400 visitors.
There were 18.3 million passenger movements at Auckland
Airport in 2016 representing an increase of 12.0% on the
2015 performance. 54% of these movements related to
international passengers. According to Tourism Industry
Aotearoa, 55% of guest nights in Auckland hotels are
domestically sourced while 12% are Australian and 7%
are Chinese.
HOTEL MARKET PERFORMANCE
The Auckland hotel market has continued to experience
strong growth in demand and this combined with limited new
hotel supply has resulted in further strong growth in ADR and
occupancy across the year.
Occupancy levels in Auckland have shown significant growth
in recent years as a result of increased demand coupled
with limited new supply. All segments are achieving record
occupancy levels with the 4.5 and 5.0 star segments both
above 85%. The market as a whole achieved an average
occupancy rate of 86.3% in the 12 months to January 2017, up
from 84.4% in the same period in 2016.
All segments are now also achieving record ADR’s with growth
of 12.2% achieved across the market as a whole in the 12
months to January 2017 with an ADR of $185.71. As a result
of the combined growth in occupancy and ADRs, RevPAR
improved 14.8% in the 12 months to January 2017 to $160.33.
EXISTING AND FUTURE SUPPLY
There are currently a total of 68 hotels across the city with
some 9,246 rooms as at January 2017.
The current pipeline of hotel supply represents an increase
of 32% of the current inventory over the next five years at
an average of 5.7% per annum assuming all properties are
developed as planned.
Significant projects planned for Auckland include:
• Copthorne Hotel HarbourCity – The Copthorne Hotel
HarbourCity on Quay Street is currently undergoing a
refurbishment reportedly costing $30 million. The hotel will
be converted to the Group’s "M Social" 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 195-room Park Hyatt
Wynyard Quarter has recently started construction. The
hotel will occupy a prime waterfront site in Wynyard Quarter
with construction expected to take two years.
• 396 Queen Street – Russell Property Group acquired an
office building in November 2016 known as 396 Queen
Street, to the southern end of the central business district,
which they intend to convert to a 255 room 4.5 star full
service hotel.
• SkyCity Hotel – As part of the construction of the New
Zealand International Convention Centre, SkyCity has
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.
• Ritz Carlton – Chinese developer’s NDG have 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.
• Pullman Auckland Airport – Auckland International Airport
and Tainui Group Holdings have recently announced plans
to develop a new 250-room Pullman Hotel at Auckland
Airport. The hotel is planned to open in late 2019 and
will be located on an existing car park near the Novotel
Auckland Airport which was constructed in 2011.
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.
An independent report was commissioned by the New Zealand
Government to provide forecasts of hotel performance for the
major markets. This report used econometric modelling to
forecast Auckland occupancy levels to reach 89% by 2020 with
ADR growth of 26% over this five year period based on the
current pipeline of hotel developments.
2017 is expected to be a strong year for the hotel market with
the World Masters Games, British & Irish Lions Tour and Rugby
League World Cup all taking place during the year.
With new stock entering the market throughout 2018-2020,
we are forecasting the market to stabilise in the mid 80%
range before improving, following the construction of the New
Zealand International Convention Centre which is expected to
drive further demand for hotel rooms.
We are forecasting continued ADR growth as the market
benefits from a combination of high occupancy levels, the
development of new 5-star hotels in the central business
district, together with a higher proportion of conference
guests who generally pay higher rates.
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