Auckland hoteliers adopt 'survival mentality' as 76pc of rooms lie empty

Thursday, 13 January 2022

Auckland hotel manager Brett Sweetman says bookings are down 50 per cent compared to last year.

Hotel and motel operators across Auckland are preparing for a difficult year ahead, with a “survival mentality” required to get through several more months without international tourists.

December 2021 saw paying guests stay in just 24 per cent of non-MIQ hotel rooms in Auckland, significantly down on the 47 per cent occupancy seen in December 2020, according to economics consultancy Fresh Info.

Before Covid-19 border closures, Auckland hotels would have expected to be 80 to 85 per cent full during that month.

December 2021 saw guests staying in just 24 per cent of non-MIQ hotels in Auckland, significantly down on the 47 per cent occupancy recorded the year before.

And with revenue per available room at only $44 – well below sustainable levels – the industry fears the domestic market won’t be enough to keep some accommodation businesses afloat. It’s a fear motel owner Troy Clarry shares.

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Typically, January would usually see Clarry’s Katalyma lodge in Whangaparāoa about 95 per cent full, with February and March fully booked out.

Hotel Council Aotearoa strategic director James Doolan says Auckland is viewed as Covid-19 “ground zero” by other parts of the country.

But until March 2022, Clarry has 5 per cent of rooms booked.

“I think with genuine operators like myself who do well over summer periods with tourism, the majority are just tired,” said Clarry.

“They need to see an end to it, and they’re thinking of selling. My prediction is this year will just be really tough, then New Zealand will get busy. We just need to get through this year.”

Last January, the America’s Cup threw Auckland hoteliers a lifeline, but no such luck this year.

Summer would normally see Australian tourists here in droves, with a large number staying in Auckland CBD hotels after they arrive, then spending weeks in regional motels, according to Hotel Council Aotearoa’s strategic director, James Doolan.

Auckland CBD hotels require strong international tourism to meet their financial targets, according to Doolan.

However, Doolan believes with rising anti-social behaviour on Queen Street, retail shops lying empty and a lack of social events over summer, city visitors won’t be flocking back any time soon.

“Outside of Auckland, there’s a perception that the Auckland CBD is Covid-19 ‘ground zero’, since Auckland is the location of most of New Zealand’s MIQ rooms,” said Doolan.

“The lack of free-spending international tourists in our city centres is one of the reasons why those locations are fairly grim, ever since borders first closed in March 2020.”

CBD hotel operators are realistic about the year ahead. Park Hyatt owner Brett Sweetman said it will require a “survival mentality” to keep cash rolling in, and ensure job security for staff.

“All we can do is work with the domestic market and offer attractive options,” said Sweetman.

“If the government could give exemptions for sporting events to be held here, for example, that would be beneficial for everyone. We have to look at industries that we have a relationship with. But we can’t keep drawing down on the domestic market as it’s hard.”

Franz Mascarenhas, owner of Cordis Hotel – Auckland’s largest – is optimistic the year’s fourth quarter will bring a much-needed breakthrough.

“We think that it will ramp up through the year, although lots will depend on the government's policies,” said Franz.

“We know it will take time. The first half of the year will be quite subdued but ramping up as the months go by. We want a strong last quarter.”