Slow demand for hotel rooms not reflected in all regions

Wednesday, 13 August 2025

More than 500 delegates are in Christchurch for this year’s Aotearoa Hotel Industry Conference and Exhibition.

Times are still tough for New Zealand's hotel industry, with poor winter demand and room supply keeping occupancy growth down, an industry analyst says.

But the national data does not reflect the performance variation across different cities, or hotel developers’ confidence in the industry’s future.

More than 500 delegates from around the world are in Christchurch for this year’s Aotearoa Hotel Industry Conference and Exhibition, and proceedings kicked off with a deep dive into the metrics of the local industry.

Matthew Burke, Asia-Pacific regional director at STR, CoStar's hospitality analytics division, told delegates that globally, average daily rates (ADR) and occupancy rates were slowing.

New Zealand’s hotels had a reasonable summer period, but the winter period was weak especially compared with the strong winter of 2023, he said.

Hotel occupancy growth rates are a particular challenge in Auckland and Wellington, STR’s Matthew Burke says.

“A combination of more hotel rooms coming on stream, and a lack of big international events, such as the Fifa women’s world cup, meant occupancy remained an obstacle.

“There’s been a bit of recovery in demand, but it still does not match supply, and that holds true for some regions in particular.”

While ADR remained healthy and above the long-term average, there were still challenges, he said.

But Burke’s data showed occupancy and ADR growth varied across the big tourism centres, with Rotorua seeing a surge of domestic tourism and Christchurch and Queenstown turning in solid performances.

That contrasted with Auckland and Wellington, which recorded negative growth in occupancy and ADR rates.

Burke said demand for hotel rooms in Christchurch had been growing at a healthy rate but not much supply was coming through, and that was supporting growth.

Demand in Queenstown had actually turned south earlier this year, but the last school holidays came with snow and delivered improved occupancy, he said.

Auckland’s hotel industry needs the New Zealand International Convention Centre to open, Burke says.

“In Wellington, no new rooms are coming on, but demand continues to shrink. While its woes are predominantly mid-week, they extend into the weekend and reflect the effects of government cutbacks.

“In Auckland there’s been a lot of new supply coming on and with a fall in demand it has been a recipe for occupancy decline,” he said.

“It has started to improve, and new construction is starting to slow down, but the city really needs the NZ International Convention Centre to open.”

The outlook for summer was mixed, with different trends evident in the North and South Islands, but ADR rates were under pressure, Burke said.

“Data broadly points to stagnant growth and more seasonal outcomes, but more demand drivers are on their way, so things should start to improve.”

But developers and hotel executives who spoke at the conference’s various panel “power” sessions were more upbeat, and talked of the opportunities in New Zealand, including in regional centres, such as Hamilton.

Their optimism was reinforced by a host of announcements about ongoing, or upcoming work on new or repurposed hotels in different areas.

An artist’s illustration of what the finished Sheraton Christchurch hotel will look like.

The biggest announcement of these was that America’s Marriott hotel group would be operating the $150 million redevelopment of the iconic Noah’s Hotel in Christchurch under its Sheraton brand when it was completed.

It would be Marriott’s first hotel in the South Island, and its third hotel in New Zealand with the JW Marriott and Four Points by Sheraton properties in Auckland.

Mainland Capital is the developer behind the redevelopment. Its director Ben Bridge said that to have a globally respected brand like Sheraton commit to the property was not only a strong endorsement of the development itself, but also a sign of growing confidence in the city’s future.

Panels included updates from developers behind new hotels coming, or planned for the coming years. They included the Pullman Hamilton, due to open next year, and the Marlborough Food and Wine Experience Hotel, scheduled to open mid-2027.

And Accor, the country’s largest hotel operator, announced its new 60-room Tribe Hotel and 73-room Jo&Joe Hotel would be opening in Auckland in October and November respectively.

The two brands would be debuting in New Zealand for the first time, and Accor’s Pacific region chief operating officer Adrian Williams said they represented a new era of hospitality.

“We are bringing fresh energy to Auckland’s hotel scene, and giving guests more choice and more reasons to explore this dynamic city.”