Hotels look through oil shock to pursue long-term goals
Sunday, 12 April 2026
Soaring fuel prices and air travel disruption have left the hotel sector on high alert, but the crisis is not stopping two of New Zealand’s big hotel chains from pursuing their development plans.
The Grand Millennium in downtown Auckland recently completed phase two of its $30 million refurbishment program and aims to complete the final phase of the hotel’s transformation later this year.
Meanwhile, homegrown hotel chain Sudima has just signed a deal to build its first hotel outside of New Zealand, in Tonga, and it plans to announce another development, in the South Island, in the near future.
The Grand Millennium is managed by the NZX-listed Millennium & Copthorne Hotels New Zealand, which has 18 hotels around the country under the Millennium, M Social, Copthorne and Kingsgate brands.
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Millennium Hotels and Resorts vice president operations Hani Daher said he was watching anxiously to see what happened, but the crisis had not impacted business on the books in New Zealand.
“We’ve had minimal cancellations, and it's been from a couple of the countries directly affected. Thinking ahead there might be more disruption, but it's all reliant on the airlines and the cruise lines.
“If they keep prices sensible longer-term, we could anticipate a spike in interest in New Zealand - as we are a safe haven, with a lot to offer as a tourism destination, and our conversion rate makes us an attractive place to visit.”
The hotel sector needed to capitalise on that and keep driving the momentum that has been building with marketing and tie-ins to events, he said.
“New Zealand in general has seen tourism numbers increase, but we had a very strong quarter four in Auckland, and the first quarter was really solid.
“In the current environment, it would make sense to do a push for domestic tourists, and Australia is another obvious market to do a bit more target-marketing to.”
His company was working to adapt to what was happening around it, to tweak its marketing plans to meet demand, and to absorb higher fuel costs - rather than passing them on to guests - as much as possible.
But Daher’s focus was on overseeing the Millennium group’s move from the post-Covid “revive” to its “thrive” period in New Zealand, and that meant investing in the hotels to ensure they meet their potential.
It had refurbished its Copthorne hotels in Bay of Islands and Palmerston North, and its Millennium hotel in Rotorua, but the Grand Millennium refurbishment was the centre piece of the investment, he said.
The $30m spending includes an upgrade of the hotel’s 453 rooms, its club lounges, and its pool and health centre; the creation of a five-venue dining precinct; and the revitalisation of its 1000-capacity ballroom and its 15 other event spaces.
“We wanted to reposition it back into the premium sector of the Auckland market with a five star rating, and put the ‘grand’ back into the Grand Millennium brand as a big part of that ‘thrive’ phase,” Daher said.
“It’s been done deliberately to time with the opening of the NZICC which really puts Auckland back on to that international conference circuit, and which will be a real driver for the city.”
The Grand Millennium was in a prime spot in the city centre, within walking distance of the International Convention Centre, and facilities such as the Aotea Centre, the Town Hall and the City Rail Link’s Te Waihorotiu station when it opened, he said.
“A strong programme of events, business, sporting and cultural, is important and adds to the vibe of the city, and its attractions.
“Along with our food and beverage offerings, which aim to enhance the guest journey, it all helps to reposition the hotel, and to ensure we can cater to a diverse group of travelers as well as our local market.”
Millennium & Copthorne Hotels New Zealand is part of Millennium Hotels and Resorts, a global hospitality group that has its headquarters in Singapore.
But the company was committed to growth and further investment in New Zealand, Daher added.
For Sudima Hotels chief operating officer Les Morgan, the oil crisis was an unwelcome shock, but it would not divert the company away from its long-term strategy for growth.
Economic shocks did not come as a complete surprise as part of modern business life was disruption, and disruption seemed to be coming more regularly, he said.
“So this shock is somewhat planned for. Coming out of Covid, there are lessons we have learned. We are cost-focused and we haven’t got ahead of ourselves, we’re in a position to track through this.
“We have seen some cancellations, but not of a material number, and we’ve been able to replace every single piece of business. It was a strong summer for tourism and hotels in general, and that has left us in a good financial position.”
That was not to say they were not anxious about what the future held, and New Zealand’s dependence on international flights and air connections meant higher fuel prices would have some impact on demand, he said.
“But the picture is not clear about how severe that impact might be, and we might see more cruise ships and airline deployments to the Pacific, away from more troubled regions.
“There could be some upside, although we are not counting on it. Our mantra is wait, watch, worry, but it won’t take away our plans for growth over the long-term. Part of our strategy is to remain flexible with our goals for our business.”
Morgan was instead focused on Sudima’s recently announced deal to develop a new upscale 150-room hotel, resort and 600 to 800-person capacity convention centre in Tonga.
The project, which had a cost estimate for building of $100m, had passed a milestone with the signing of a memorandum of understanding with King Tupou VI in March, he said.
“We began investigating the feasibility of a hotel in Tonga a couple of years ago, and it was clear there was an opportunity. There’s increasing demand for high-quality accommodation there.
“And the convention centre will be the only one of its size in the country, so we see opportunities in that space too.”
The hotel, which would sit beside the new Parliament precinct, was expected to create up to 100 permanent and part-time jobs, contribute about T$18 million annually to the local economy, and act as a catalyst for further investment and development.
It would be the first Sudima hotel overseas, which was exciting for the company, and it would also be a learning curve for it, he said.
“This hotel will give us confidence in our ability to operate overseas. We have a strategic plan to do more in the Pacific, and also to move into Australia. This is just the first stage.
“It is not the only hotel we have in development. We’ll be announcing a big resort development in the South Island in the next month or so, and we have plans for another hotel on the drawing board.”
Sudima Hotels is one of New Zealand’s few homegrown hotel brands. It has seven hotels across Auckland, Rotorua, Kaikōura, Christchurch and Queenstown.