Queenstown has 'critical shortage' of hotel rooms, report says

Thursday, 15 September 2016

Ramada Hotel and Suites in Remarkables Park opened in Queenstown in June 2016.

Destination Queenstown chief executive Graham Budd is playing down a report that suggests a hotel shortage could cripple tourism in the resort.

An 'unprecedented tourism boom' has led to a critical shortage of hotel rooms in Queenstown, a report by commercial real estate company Colliers International suggests.

Artists's impression of a new Jucy hotel which is expected to be built by October next year in the middle of Queenstown.

Numbers of tourists visiting New Zealand is up 700,000 or 26 per cent over the past three years and up 11 per cent to $3.34 million in the year to July, the report says.

Budd said Queenstown was booming and as a result, a few visitors might experience 'a little bit of short term pain' not being able to stay in the accommodation they wanted, on the exact night they wanted.

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'It's an issue that's pretty well understood. We know there are constraints in hotel rooms. It's not a surprise [the report].

'This is a very successful time for tourism … [and] there's very seldom an equilibrium between supply and demand,' Budd said.

Colliers International Tourism and Leisure director Nick Thompson believed visitor growth would sky-rocket next year with the Lions Tour, the Rugby League World Cup and the World Masters Games set to take place.

The shortage of rooms would be most noticeable in Queenstown and Auckland, which would see accommodation capacity 'run close to maximum occupancy' from November next year, he said.

'[It] will place the country's accommodation services under even greater pressure.'

Much of the problem could be attributed to finding sites to build hotels, the cost of land and the cost of building them, which has risen above about $6000 per square metre, hotels division national director Dean Humphries said.

'The feasibility of new hotel developments is very marginal right now,' he said.

'New solutions need to be found.'

Humphries said there were virtually no new hotels likely to open in the next 12 months and less than 1200 rooms were presently under construction around the country.

The latest hotel to open in Queenstown was the $25m Ramada in Remarkables Park, the first hotel to open in the resort in five years. A Jucy Snooze Hotel was planned to be open in October next year.

A recent Ministry of Business, Innovation and Employment report noted about 9700 new hotel rooms would be needed in the next 10 years to cope with anticipated growth of about $4.5m visitors per year.