A lack of hotel beds in Auckland during major events next year including the British & Irish Lions rugby tour means visitors will likely be stung by a "spike" in prices, a Government-commissioned report warns.
Auckland's looming hotel "critical constraint status" could push business and major events to other areas, the new research finds, with escalating room rates posing a risk to the wider tourism industry.
A total of 26 additional hotels, above and beyond what is currently planned, will be needed over the next 10 years, across the country's tourist hotspots.
There is a current shortage of hotel rooms during high demand periods in all the centres, particularly in summer and autumn.
That has pushed up average revenue per available room to record levels in Auckland, surpassing levels achieved because of huge demand during the 2011 Rugby World Cup.
The Government wants to drive new investment in hotels, with the help of the findings from the report, commissioned by NZTE, Tourism New Zealand, and the Ministry of Business, Innovation and Employment (MBIE).
But for areas like Auckland, the shortage will be felt before new rooms can be constructed.
"Current demand and supply projections indicate that Auckland's hotel sector will remain highly constrained over the next decade, resulting in annual occupancy rates that approach 90% in the long-term," the report states.
"It is likely that the Auckland hotel market will reach "critical constraint status" as early as 2017 with no new supply forecast over the next 18 months and a number of major events occurring such as World Masters Games, the British & Irish Lions tour and the Rugby League World Cup."
That will likely lead to a "spike" in the average daily rate for a hotel room next year, "due to no new room supply and aggressive pricing".
The report states there is a risk of escalating Auckland room rates during peak times "creating long-term consequences for the wider tourism industry", and a loss of business and major events to other areas. Other business models like Airbnb and campervans may be turned to by tourists put-off by increasing prices, the report states.
While infrastructure in centres like Auckland largely performed well during the 2011 Rugby World Cup, there was controversy about the prices some visitors were asked to pay for accommodation.
In the lead-up to the tournament, the New Zealand Herald reported on one lodge that had increased its normal $31.43 a night rate for a single room, to $350 a night for a single room with shared bathroom and kitchen facilities.
And rugby writer Peter Bills' description of New Zealand as 100% rip-off rather than 100% pure sparked debate about how much visitors pay during stays here.
The new research - part of work dubbed Project Palace - focused on Auckland, Rotorua, Wellington, Christchurch and Queenstown.
It showed that, if demand and supply estimates are accurate, the shortfall in new hotel rooms could be up to 4526 across these centres by 2025, over and above new hotels already planned.
"While there is significant hotel investment underway and planned, this report underlines the size of the opportunities there are to grow the sector in New Zealand," Economic Development Minister Steven Joyce said.
"The Project Palace work will help match investors with opportunities, and reduce the time taken to fill information gaps that can slow down investment."
International visitor arrivals, particularly from China and Australia, will be a major driver of hotel demand, with numbers forecast to grow 5.4% each year.
Lobby group the Taxpayers' Union attacked the research as wasting taxpayer money on analysis that should be done by the private sector.
