Commercial

Staggering increase in Rotorua’s hotel room rates

Hotel room rates are rising rapidly as the hotel sector recovers from the Covid-led downturn.

Tuesday, July 26th 2022

Average room rates for the quarter ending June 2022 were above the pre-Covid period of 2019 for four out of the five main centres.

The main mover is Rotorua at $181.59, up a staggering 40.2% followed by Christchurch  at 9.6% and Auckland 4.5%.

Colliers International hotels national director Dean Humphries says the strong demand-led recovery is on the back of higher volumes of international and corporate travelers

“Exceptionally strong room rates being achieved right across the country despite occupancy rates still in recovery phase.”

He says on the flip side of the equation, the investment market has been impacted by the increasing cost of capital and high inflation.

“Despite a number of hotels being offered to the market and robust levels of international and domestic enquiry; many investors are taking a more reflective approach, whilst they reassess their own internal return requirements and review global investment environment,” says Humphries.

However, investors typically pivot toward tangible assets in times of high inflation so revenue and profitability can be protected. “This is particularly relevant with hotel assets, that have the ability to quickly pass through higher costs and protect profits and investment returns, as we have recently seen with increased room rates right across the country.”

Humphries remains hopeful there will be more investment activity in the second half of this year as inflationary pressures start to ease and the short/medium term cost of capital stabilises. He says the sector is now on a clear recovery path with forward bookings for the peak season looking exceptionally strong.

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