Growth puts pressure on hotel sector

HOTELS are entering a period of unprecedented demand, Colliers International believes – and more are needed to cope.

The commercial property giant’s national director of hotels, Dean Humphries, said the sector was beginning a ‘‘bull run’’, with occupancy rates set to soar as visitor numbers increased.

But this also meant room prices were likely to rise, and the average stay would get more expensive.

With pressure for rooms increasing and a shortage of supply, rates were bound to increase, Humphries said.

‘‘[This is] the end of an era where guests can stay in four- and five-star hotels for rates much under $200 a night. In fact, many hotels are currently charging rates in excess of $400 per night.’’

Average room rates rose 5 per cent in 2014 and were forecast to continue that rate of growth, he said.

‘‘Auckland’s occupancy rates are forecast to increase to over 85 per cent in the next two to three years, competing head on with other major international cities, in- cluding Sydney and Melbourne.’’

Last year, Auckland occupancy hovered around 82 per cent, up 4 per cent on 2013, the highest level since records began.

Wellington also recorded strong occupancy rates of 74.6 per cent, while Queenstown recorded a 9 per cent increase, to 73.5 per cent.

Humphries said demand this year would be driven by increasing visitor numbers.

International visitors numbered almost 2.85 million in 2014, and with several major sports events – the Cricket World Cup, the Fifa Under-20 World Cup and the Volvo Ocean Race – being held in New Zealand in 2015, he expected numbers to top 3 million.

He warned that the market was currently not supplying sufficient new space to cope with the demand, particularly in New Zealand’s largest city.

‘‘Despite demand for hotel rooms, there are virtually no new hotels under construction in Auckland, and only a minimal number of new hotel beds coming on stream over the next three years.

‘‘Of further concern, we are likely to see a number of existing hotels being closed for refurbishment at a time when we least need it.’’

Photo: GRAHAME COX/FAIRFAX NZ More demand: Auckland has seen major growth in visitor numbers and hotel occupancy, and needs more hotels to keep up with the demand, according to Colliers International.