Auckland’s hotel market is about to get challenged by the biggest wave of new top-end properties in its history at precisely the wrong time.
The openings are led by the Park Hyatt Auckland on September 15, The Hotel Britomart on October 1, the QT Auckland before the end of 2020 and the revamped Sofitel (lobby pictured) reopening sometime in Spring.
They will be joined next year by the Sudima Auckland City and voco Auckland from IHG.
Matthew Burke from STR says there are currently 35 hotel developments underway in New Zealand after more than a decade of minimal investment in the sector.
Burke says of the 4500 rooms under construction in New Zealand, 3000 are in Auckland and due to open between now and the end of 2022.
At this point, the Auckland market is no position to absorb such a dramatic increase in capacity.
Since New Zealand’s largest city went into its second COVID lockdown on August 11, occupancies, which were running at between 50% to 60%, have slumped to 30% and would be significantly lower without quarantine “guests”.
The Auckland shutdown – which means its residents cannot travel – has also hurt hotel performance throughout the country, which was already sub-par due to zero international tourists because of border closures.
Air New Zealand results yesterday reveals the importance of international tourists with 70% of its revenue generated by international traffic (including Kiwis travelling overseas).
The airline said domestic demand had strongly rebounded and that it was running at 70% of pre-COVID-19 capacity until the Level 3 Auckland lockdown.
Burke from STR says there are some good demand drivers for Auckland on the horizon, including the America’s Cup in March next year, and that the domestic market has matured and will fill plenty of rooms.
But without international traffic, and the flurry of hotel openings, it’s clear there are financially challenging times ahead for the Auckland hotel market.
New Zealand consumers will probably end up being the only winners, short term at least, with heavy competition among a greater number of hotels ensuring there’ll be some amazing deals in brand new hotels for people who can travel to Auckland.
Auckland hotel openings:
- Park Hyatt Auckland, 195 rooms, opening September 15, 2020.
- The Hotel Britomart, 99 rooms, opening October 1, 2020.
- Sofitel Auckland Viaduct Harbour, 172 rooms, closed for renovation, re-opening Spring 2020.
- QT Auckland, 150 rooms, opening end of 2020.
- Sudima Auckland City, room count unknown, opening 2021.
- voco Auckland, 200 rooms, opening mid-2021.