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Hotels won’t recover from Covid-19 until summer


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Hotel operators will have to wait until the end of the year before they start to see a recovery in their businesses, according to a new report.

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Property research firm Colliers International’s New Zealand Hotel Market Snapshot suggests hoteliers still face another three to six tough months before they start to see a semblance of pre-Covid-19 activity.

Colliers national director of hotels Dean Humphries said the opening of the border to international visitors from countries that did not need a visa next week was “excellent” news for the industry.

However, he said that the country’s tourism sector was seasonal, meaning the economic benefits of the reopening would not be felt until next summer.

“With the exception of Queenstown who will benefit from a strong winter season, the wider market may therefore need to weather another three to six months of headwinds before any real recovery is seen.”

Some operators would find conditions tougher over the next three months as hotels previously contracted by the government as managed isolation facilities are returned to the market.

At its peak, there were 32 MIQ facilities around the country and all but four would be converted back to ordinary hotels.

“There will be a period in Q3 where certainly demand will be low given that it is off season and there will be a lot of new inventory back into the market.”

Humphries said he thought consumers would be able to get some good deals at hotels between July and September as supply outstripped demand.

But that would soon end around October, when he expected international visitors to flock back to New Zealand.

He said the 2022/2023 summer season was looking positive based on forward enquiries and bookings.

Quarterly snapshot

Colliers’ report for the three months ended March pointed toward a modest lift in the performance of hotels in Rotorua, Wellington, Christchurch and Queenstown over the year earlier.

Hotels in these regions recorded a rise in occupancy rates, revenues per average room (RevPAR) and average daily rates (ADR).

Auckland hotels recorded higher vacancy levels and lower RevPAR, but this was largely attributed to the disproportionate effects the Omicron outbreak had on the city.

More hotels expected to hit the market

Humphries said the gradual removal of border restrictions would likely see more hotels put up for sale now that investors could actively review these assets.

“New Zealand remains a highly appealing market for people looking to allocate offshore capital due to its transparent legal system, geopolitical status, and strong relationships with leading global economies, which all shape as notable drawcards,” he said.

Given that major hotels are rarely brought to market, this may drive a wave of demand from investors who are keen to secure assets in New Zealand, he said.

“Conversely, some vendors are now assessing their options to either recycle capital or rebalance their portfolios following the challenging period that Covid-19 put hoteliers through.”

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