Domestic hotel guest nights in Rotorua in the third quarter of the year were up 56 per cent compared to 2019. Photo / Getty Images
Rotorua is being labelled a “standout performer” and hotels are showing signs of bouncing back as new data shows guest nights have risen.
But a local hospitality representative is concerned there may not be enough
space for visitors this summer as some hotels are used to house the homeless or returning Kiwis.
Colliers International’s latest New Zealand Hotel Market Snapshot showed domestic hotel guest nights in Rotorua in the third quarter of the year were up 56 per cent compared to 2019.
It was the best result in the North Island followed by Auckland with 41.4 per cent.
Dean Humphries, Colliers’ national director of hotels said New Zealand’s key hotel markets saw a “significant spike” in the 2020 third quarter compared to the same three-month period last year despite the impact of Auckland’s second Covid-19 lockdown.
Humphries said occupancy rates declined significantly in the second quarter of 2020, with all regions recording historic lows.
“Occupancy started to rebound in early June after the six-week national lockdown ended.”
He said this was underpinned by strong demand from Government-contracted hotels used for 14-day mandatory isolation, together with a notable increase in domestic leisure and corporate activity.
Humphries said further improvement was seen in July on the back of the winter school holiday period, with all hotel markets except Christchurch recording occupancy levels of more than 50 per cent.
“Levels then moderated in August … before rebounding again in September.
“All key markets in the country recorded a significant increase in domestic guest nights in the third quarter of 2020 compared with the same period in 2019, noting mandatory isolation of returning Kiwis played a significant role in this.”
Humphries said while it has been a challenging year for the hotel sector there were some promising signs emerging.
“The Covid-19 pandemic continues to have a significant impact on the global tourism industry, and New Zealand is no exception.”
Humphries said the South Island was the biggest winner, with domestic guest nights up 86.2 per cent in Queenstown and 62.3 per cent in Christchurch.
But Wellington took an 8.8 per cent hit due to the small number of isolation facilities in the capital, he said.
The Colliers report also showed the average daily room rate across all key markets was on par with 2019.
Rotorua was the “standout performer” with average daily rates increasing 13.5 per cent in the year to September, Humphries said.
Reg Hennessy, the owner of Hennessy’s Irish Bar and president of Rotorua branch of the Hospitality New Zealand, said the results were “good news” for hoteliers and the hospitality industry.
However, Hennessy said he was concerned how Rotorua would fare over the summer months if visitors could not find hotel or motel beds they may opt to go elsewhere.
“We really need those visitors to support us through the next six months and help to cope through the next winter, especially if we still don’t have any international visitors.”
With some motels housing homeless and three hotels used as Covid-19 quarantine facilities other hoteliers were benefiting from the rise in visitors, he said.
Hennessy said Rotorua definitely needed more domestic tourists to fill the gap left by international travellers.
Others in the hotel industry say the use of three hotels for managed isolation has put pressure on others but hotels are coping.
Ann Gregor-Greene, lodge manager at Peppers on the Point Lake Rotorua resort, said the results were “fantastic news” but not surprising.
“Occupancy rates over the school holiday break Rotorua hotels were practically full and lots of people are travelling to this area again.
“We’re having visitors from right throughout the North Island, including from Auckland and the South Island as Rotorua has many great attractions and places to explore.
“Every visitor has a Covid-19 story to tell and with them not being able to take their planned holidays overseas, many are opting to come to Rotorua instead.”
Gregor-Greene said with the three hotels being used for managed isolation the pressure was on other hotels but they were coping.
Rotorua Chamber of Commerce chief executive Bryce Heard agreed having some hotels used for managed isolation had helped increase occupancy rates for others.
“It’s really great news that Rotorua is benefiting from the shift to alert level 1 with lots of people who would normally head overseas wanting to spend this money domestically.
“With 40 per cent of our visitors usually being international travellers and about half of those from Australia we definitely need lots of domestic travellers to fill that gap.”
Heard said the sooner the country was able to open up a transtasman Australian bubble, even with Queensland, the better.
Humphries agreed saying domestic demand had been strong, but without international demand, hotels were still operating at overall occupancy levels generally below 50 per cent.
He said the sector had yet to witness any significant downward momentum in room rates, primarily due to Government-contracted business across some 32 hotels throughout many of the main regions in the country, representing 7200 rooms.
Humphries said looking ahead, the continuation of the self-imposed border control isolation regime and strong domestic demand would pave the way for the New Zealand hotel sector over the next six months.
“The recent announcement of Australia opening up state borders to New Zealanders suggests a reciprocal transtasman bubble may be forthcoming in the short term.
“Nevertheless, any wider opening of New Zealand’s borders to international travellers is unlikely to occur until 2021 – at which point it will quickly become the driving force behind a wider recovery of the hotel sector.”