Hotels face closure for up to 18 months
More than half of New Zealand’s hotels are estimated to be closed, and maybe as many as two-thirds, as the impact of Covid-19 shuts trade.
The news comes as the biggest domestic hotel chain, Scenic Hotel Group, reveals it is closing two hotels, one in Dunedin and the other in Franz Josef, for 18 months, and has others closed in the short term.
Hotels specialist at Colliers International, Dean Humphries, said its survey early this month of just over 200 of the large hotels in the five main tourist regions showed 33 per cent temporarily closed.
Others were still open because they had a few overseas people stuck in New Zealand trying to get home, but they were departing, and some were essential services workers.
‘‘Anecdotally, we would suggest more than 50 per cent now, particularly in regions like Queenstown and other pure leisure regions. Pretty much everything is closed in Rotorua, and I would suggest 80 per cent to 90 per cent of hotels are closed in Queenstown.’’
Colliers would resurvey the hotels in a couple of weeks.
‘‘I imagine that number would have risen significantly. We would probably be well over 50 per cent, possibly as high as two-thirds could be closed,’’ Humphries said.
Les Morgan, chief operating officer of Sudima Hotels and Hind Management, the company running the Sudima hotels, said it had closed Sudima Rotorua for three- to 18 months.
It would also be closing its new five-star, 80-bed hotel, Sudima Christchurch, in the central city in a month’s time.
The guests in Rotorua were largely international tourists. There was little corporate or business trade at Sudima Rotorua, a large hotel with 250 beds.
Sudima’s decision to close the Rotorua hotel was based on the assumption that New Zealand’s borders would be closed to international tourists for 18 months.
The company had a team of a dozen staff carrying out maintenance and cleaning at the hotel and had also installed some hurricane fencing between hotel wings to keep people from moving around the building.
Morgan said Sudima Christchurch was five-star and more appealing to international visitors, so it would be closed for six- to 18 months also but he expected it to come back online before Sudima Rotorua. Sudima Christchurch was open for another 28 days because it had an isolation facilities contract with Government.
Sudima Christchurch Airport and Sudima Auckland Airport were both running isolation facilities under contract to the Government.
It has three hotels under construction. Sudima Auckland CBD was four months from completion and expected to open to a ‘‘soft market’’. Sudima Kaiko¯ ura would open in March next year, but the market there was also expected to be soft. Sudima Queenstown was 20 months from completion and by that time the tourism market might be in better shape, Morgan said.
Humphries said the industry did not expect trade to resume until alert level 1. The tourism industry was hoping that the country would be at this level by the third quarter of this year, starting in September.
As for proposed hotel projects, most were likely to be postponed or mothballed, Humphries said.
‘‘It would be extremely unlikely they will now commence in the short term.’’
Humphries said Colliers was pretty close to the projects and a lot of the proposed hotel projects would no longer be economically viable.
‘‘There were numerous hotels proposed around the country and I would be very surprised if any of those get off the ground in the short term. Some of them will just probably be deferred, and I would think some of them would be mothballed,’’ Humphries said.
Others that were building hotels now were well into their projects and had good lines of funding. They might open half of the hotel when it was completed and open the rest later when demand picked up. A number of those hotels did not open until 2021 and 2022.
Most hotels were in ‘‘significant strife’’ with no income but hefty outgoings. While the tourism industry appreciated the 12-week wage subsidy it needed a significant stimulus package from the Government to survive up to 18 months.