Hotel recovery anticipated as border opens to tourists

Sofitel Hotel and Spa Queenstown. PHOTO: SUPPLIED
Queenstown’s Sofitel Hotel was bought by the New Zealand Hotel Fund late last year. PHOTO: ODT FILES
The opening of New Zealand’s borders has brought a ‘‘delayed but welcomed’’ recovery for Queenstown’s hotel market, a broker says.

Commercial real estate company Colliers recently released its New Zealand hotel market report for for the first quarter of the year.

Dean Humphries
Dean Humphries
While the arrival of international visitors was excellent news for the accommodation industry, it had not been ‘‘smooth sailing’’ so far this year, national director of hotels Dean Humphries said.

‘‘It was certainly a quarter we would all like to forget and move on from very quickly,’’ he said.

Queenstown’s average occupancy rate — the percentage of occupied rooms — in the year to March 2022 was 34%, up 1% on the year before.

Challenges caused by the Omicron outbreak and delays in opening the border had pushed the sector’s recovery into the second half of the year.

Australia began opening its borders late last year and was now seeing ‘‘significant pick-up’’ in occupancy.

Mr Humphries expected that trend to flow through to New Zealand, particularly Queenstown ahead of the winter skiing season.

‘‘We are going to see demand come back and come back strongly, albeit off an extremely low base.’’

There were no hotels publicly on the market in Queenstown but there were some that would sell if the right price was offered, Mr Humphries said.

The town’s last major hotel sale was the five-star Sofitel Hotel in December last year.

The hotel, which sold for an undisclosed sum, was bought by the New Zealand Hotel Fund, a partnership which included Russell Property Group, New Zealand Superannuation Fund and Lockwood Property Group.

Vendors had been reluctant to drop their prices from pre-Covid levels because of the rebound the market was forecast to make.

Domestic capital, which before the pandemic represented about 50% of the market, had been the only driver of sales for the past two years.

Mr Humphries expected international investors to start showing interest again now they could travel to New Zealand.

Queenstown and Auckland were two regions offshore investors liked to get a stake in before they expanded throughout the country.

Hotel assets in Queenstown had traditionally been ‘‘very tightly’’ held and that was why there had been a lot of development in the past three or four years, Mr Humphries said.

There were about 117 hotel rooms under construction in Queenstown at the moment .

It was possible, as the tourism sector recovered, there could be some hotels listed on the market publicly.

If there was anything to be sold, it would most likely be around the peripheral areas, such as Remarkables Park where there had been a lot of development.

‘‘To be fair, I don’t think there will be a lot of activity in Queenstown just because the assets are so tightly held by intergenerational investors,’’ Mr Humphries said.