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The only way is up


In a market that has effectively been on hiatus for more than two years, New Zealand’s commercial accommodation sector is rearing to go, with high hopes for the winter season and counting the days until international tourists and critical workers can enter the country without the weight of restrictions.

Bayleys’ national director hotels, tourism & leisure (HTL) Wayne Keene says things can only get better for visitor accommodation providers up and down the country with recent announcements that border restrictions will incrementally relax from April 12th.

“Operators have been treading water for too long and at last have some certainty – now we need to let the world know that New Zealand is open for business.

“I am exceptionally excited about the next financial year and, without minimising the pain that has been felt since the world as we know it changed in 2020, it’s time to get cranking again.

“With the contracts of all but a handful of hotels that were seconded for managed isolation quarantine (MIQ) facilities coming to an end, and with plans to re-invigorate those hotels for a relaunch back onto the visitor market, there’s plenty of positivity around.”

Keene says there is tangible optimism with confirmed timelines around border reopenings, giving New Zealand’s tourism sector a fighting chance to leverage the forthcoming ski season and get back on global travel itineraries.

“We’ll be counting on getting the emotionally-invested traveller here – the ones with New Zealand on their bucket list so our tourism marketing will need to have exceptional cut-through on the international stage to capture hearts and minds.

“Hats off to the domestic market for the support it has given to accommodation operators around the country as, for those hotels not part of the MIQ pool, it’s been a hard slog.

“Domestic tourism spending exceeded $10 billion for the first time in 2021, with people desperate to use up some accumulated leave and hamstrung for travel options.

“Given its population base, data did show that Auckland’s series of rolling lockdowns had a significant impact on national occupancy figures so when Auckland was open, the rest of the country saw an uptick in visitor activity.”

Domestic tourism spending over time


Keene says he expects the domestic market will still have an appetite for internal travel around and between islands, even with the lure of international destinations back on the cards.

“I think Kiwis have spent up on cars, home improvements and other discretionary big-ticket items during the pandemic and there could be some reluctance to venture too far from home – particularly as Russia-Ukraine tensions cast a shadow on European travel, for example.

“Even with 120-plus overseas destinations now open to eligible New Zealand travellers without the barrier of isolation or quarantine upon return, I imagine it’ll be the Pacific Islands and Australia that will lure the bulk of Kiwis looking to head offshore.

“Meanwhile, convenience and an element of certainty will underpin domestic travel and the snow season will provide new impetus to get away for a break.”

It is expected that Kiwis will opt for shorter trips over 2022, with recent surveys showing a preference for weekend trips or getaways of between two and five days.

Early indicators suggest only a quarter of Kiwis are intending to take an overseas trip within six months of MIQ being removed.

Proportion of New Zealand expecting to take a domestic holiday during 2022


NB: Respondents could select more than one option so sum of the bars adds to more than 100%.

Proportion of New Zealand intending to take an overseas holiday within 6 months of MIQ being removed


Source: Activating Domestic Tourism Working Group – Domestic Growth Insight Tool (DGiT) survey

Noting that flagship visitor destinations like Queenstown have really struggled in the last two years, Keene says hopes are pinned on better days ahead.

“When the New Zealand market overall is tough, Queenstown bears the brunt of it and while the town was thrown a lifeline with the opening of the trans-Tasman bubble last year, hopes were dashed when it burst prematurely.

“Once direct route international flights and the long-haul market rallies, I am certain that Queenstown will be among the first destinations to recover quickly, confirming its jewel-in-the-crown status.

“As the town has long been reliant on young travellers to work behind the bar and on tables, the soon-to-open border to visa holders will largely underpin some return to normality in the hospo’ sector in Queenstown.

“The perennial headache, however, will be securing accommodation for those workers – that’s an enduring quandary that will take some time to work through.”

Keene says “revenge travel” from offshore markets is the carrot that our accommodation sector is hanging on to right now – and he thinks operators are ready for an influx.

“That hospitality muscle is crying out to be exercised and most operators have utilised the down-time to really work on their businesses, fine-tuning their offerings and becoming more cost-conscious.”

Hotel occupancy has taken the biggest hit in the recent history of New Zealand tourism due to closed borders and with this country lagging behind other markets around the world that have reopened ahead of us, hotels will have a softer re-entry than some of our international counterparts.

Occupancy rates over time for New Zealand hotels


In the nationwide motel market, Keene says those operators that have stuck with the visitor market – as opposed to the long-term rental sector – are well-positioned to capture the generally more-budget friendly segment of the traveller pie.

“There’s the will and the want in the motel sector.

“Kiwis love motels, and there’s also a strong following from international visitors who see them as offering a user-friendly home-away-from-home when touring the country.

“There is definitely capacity in the market for new motel developments and Bayleys’ HTL team is currently working closely with clients looking to build.

“Given the age of some of the motel stock around the country, there is certainly room for new, more-modern motel accommodation offerings – the challenge is in finding the right sites, and when that happens, there are supply chain hiccups and construction sector hurdles to navigate now.”

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