Locals helping speed room night recovery

Higher room rates should benefit hotel profit margins, but will also add to general inflation ...

Demand for hotel accommodation continues to recover, with room nights sold in New Zealand’s major hotels returning to around 96 per cent of pre-covid levels last month.

Figures reported by Hotel Data New Zealand (HDNZ) and analysed by Horwath HTL show recovery is heavily driven by domestic guests, with hotels reporting 74 per cent of room nights sold to Kiwis, compared to 56 per cent in October 2019.

But the report says staff shortages across the country continue to prevent many hotels selling all their rooms during peak periods, delaying the sector’s recovery and causing businesses and consumers to pay more for their overnight stay.

Combined with significant cost inflation, hotels effectively have “no choice’’ but to adjust for lost revenue by increasing room rates, which on average have risen by 16 per cent in October and 19 per cent in the last quarter, compared to the same periods in 2019. Average daily rates are just under $220.

“Higher room rates should benefit hotel profit margins, but will also add to general inflation, and this could risk dampening demand growth, potentially from both domestic and international guests who may seek alternative accommodation options,’’ Horwath HTL says.

International guests are still well below 2019 levels. Data from Stats NZ reported a 56 per cent recovery of non-new Zealand residents arriving in New Zealand during

October. Visitors arriving from the United States during the month recovered to 78 per cent of precovid levels, while arrivals from Australia were 63 per cent of those in October 2019.

Auckland experienced a strong improvement in demand, recovering to 93 per cent of precovid levels, up from the low to mid 80 per cent range in August and September. Auckland hotels benefited significantly from the Women’s Rugby World Cup, with 11 matches played in the city during the month.

Meeting and conference business was again strong across the country, says Horwath HTL.

Demand from this segment in Auckland, Christchurch, Wellington, Rotorua and Queenstown was higher than during the same period in 2019.

As was the case prior to Covid, most attendees are either domestic or from Australia. Operators of some major hotels in Auckland have reported a record month compared to the 12-months period pre-covid.

Leisure group business has also started to return to some areas.