New Zealand Hotel Dynamics - Q4 2014

2014 - A stellar year for hoteliers


The positive news stories emanating from the wider New Zealand economy and the property market in particular also ring true for the hotel market with all key performance indicators showing strong growth through 2014.

Nationwide occupancy levels continued their strong upward trend finishing the year at 75.7%. This is still marginally below the previous peak of 76% achieved in the 12 months to October 2004 however based on the current pace of occupancy growth, we predict a new peak occupancy level to be achieved by the middle of the year.

ADR levels have shown real growth in the past year being 3.4% ahead of 2013 compared with forecast inflation of 1.2% for the year. Ignoring the peak in 2012 associated with the Rugby World Cup, current ADR levels are the highest they have historically been.

The combination of the strong occupancy and ADR growth have resulted in RevPAR growth of 7.7% for the year. At $109.21, RevPAR has eclipsed the level achieved during the Rugby World Cup and further growth is expected through 2015.

Chart 2 compares the RevPAR trends of the major markets indexed to January 2008, prior to the GFC. Christchurch has been intentionally excluded due to the effects of the earthquakes.

Wellington clearly suffered the least during the economic downturn with RevPARs only falling to an indexed low of 98 before recovering in recent years to 113 by December 2014 representing a 13% increase over the analysed period.

The remaining markets all fell by more than 10% between 2008 and 2010 and, with the exception of Rotorua, have achieved strong growth since 2012 to be at between 113 and 115 in December 2014.

Rotorua has struggled to recover from the GFC however a modest growth trend has emerged in the last two years.

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Peter Hamilton
Director - CBRE Hotels, New Zealand
O: +64 9 359 5419
M: +64 21 920 877