Queenstown ‘standout’ market after mixed results for NZ hotels – Colliers

3rd February 2025 By Paul Yandall | paul@propertyticker.co.nz | @propertyticker

International destinations like Queenstown and Rotorua fared well in 2024 but domestic-driven centres like Auckland and Wellington suffered, according to Colliers.

In its Real Estate Investment Review and Outlook 2025 report released last week, the property agent said it was a tale of two markets for New Zealand’s hotels: international versus domestic.

“On one hand, international demand improved as visitor arrivals continued to trend toward pre-pandemic levels, while on the other the restrictive fiscal policy implemented by the Reserve Bank of New Zealand since late 2021 impacted discretionary spending and resulted in reduced domestic demand,” Colliers said.

“Accordingly, leisure markets such as Queenstown and Rotorua which are more reliant on international guests performed well in 2024, while Auckland and Wellington, being more dependent on domestic guests, in particular corporate and government segments, saw regression in both occupancy and ADR in 2024 and a RevPAR decline. 

“Auckland also continued to be impacted by additional supply, with six major hotels opening during the year.”

Christchurch enjoyed a strong event calendar last year, with Te Pae Christchurch Convention Centre’s ability to attract conferences resulting in “more compression periods occurring, and stronger trading particularly over the traditionally softer winter months”.

As a result, Christchurch saw RevPAR increase by 7.9% compared to 2023.

“Queenstown remained New Zealand’s standout market as strong growth in international demand coupled with static supply allowed an improvement in both occupancy and ADR, with the latter now in excess of $300. 

“Overall Queenstown hotels experienced a 10.1% increase in RevPAR in 2024.”

Colliers added that on the investment said, the first half of 2024 was “relatively quiet” as interest rates remained high and hotel owners and investors waited on the sidelines.

“However, following a reduction in interest rates August 2024, and further rate cuts being signalled, activity increased from Q3 onwards as pricing gap between vendors and investors narrowed,” the agent said. 

“Moving forward, we expect this gap to narrow further in 2025 as the reserve bank continues to reduce interest rates, and this coupled with improved financial returns should see further increases in transactional activity.”