Hotel rates and revenue rising as occupancy hits a 10 year high

Wednesday, 8 March 2017

Increased hotel revenue is expected to encourage investment, such as the $12 million renovation of the QT Museum Hotel, Wellington.

The average daily rate for New Zealand hotel rooms rose $15 last year and occupancy nationally was at its highest level in more than a decade.

According to Tourism Industry Aotearoa (TIA) figures for its 150 hotel members, ranging from three to five star establishments, the average daily hotel room rate last year rose 9 per cent to $172 (excluding GST).

Queenstown hotels are enjoying occupancy rates of more than 80 per cent, pushing up average daily room rates by $27 last year.

TIA chief executive Chris Roberts said the average occupancy was more than 80 per cent last year.

'Adjusted for inflation, hotel rates are now finally back to a level last seen in the late 1990s.

The addition of more hotel rooms, such as at the Jucy Snooze pod hotel at Christchurch airport, has led to a slight drop in city occupancy rates.

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'This reflects the strong international tourism growth over the last two years, and the limited number of new hotels coming onto the market'.

The combined impact of the higher daily rate and occupancy levels saw revenue available per room grow by 12 per cent to $139.

Roberts said that was important to encourage new investment in hotels to cater for the continued growth in tourism.

Popular tourist areas such as Auckland and Queenstown saw average daily rates rise by $19 (to $183) and $27 (to $194) respectively.

Queenstown TIA hotel representative Brian Howie, head of operations at Millbrook Resort, said that with occupancy running at close to 83 per cent in the resort town, higher room rates were inevitable.

'If you weren't seeing that increase and you were a hotel owner, you'd be asking questions of your hotel manager.

'If you look at rates in Sydney, Melbourne or Brisbane, I still don't think [an average room rate of $200] is a number that people should be raising their eyebrows about'.

Christchurch went against the trend with both occupancy and room revenue to dropping marginally, while the average daily room rate increased only slightly to $158.

Roberts said the addition of 120 more hotel rooms to the Christchurch market last year had an impact.

International booking website hotels.com has also released its annual price index for all types of accommodation - including motels, hotels, hostels and holiday parks - that it lists as New Zealand's top 20 destinations.

It found average room rates rose 2 per cent last year across the country, with Queenstown and Auckland again experiencing the biggest gains, and Christchurch showing a 5 per cent decrease.

For international destinations, hotels.com said travelling Kiwis found the cheapest room rates in Chiang Mai, Thailand and Phnom Penh, Cambodia at $64 a night on average.

At $486 per night Santa Monica in the US had the most expensive average room prices among the top 100 destinations analysed.