A surge in new hotels for the city centre in response to accommodation shortage

Five new hotels are due to open in Auckland’s city centre by the end of next year, with a further eight set to come online in the next few years. These developments are further to the openings of refurbished and rebranded sites we’ve seen recently: the M Social (Quay Street) the Grand Mercure Auckland (Customs Street) and the Hotel Grand Windsor (Queen Street).

The AVANI (Metropolis Building) opens its doors for business today, with the Sofitel So (67 Customs St East) next in line early next year. Next to enter construction is The Pacifica (Commerce St), with developers planning for the build to start next month.

This unprecedented rate of hotel development is in response to current high occupancy levels and the forecast for continued and significant growth in accommodation demand, particularly for four and five star hotels.

A 2016 report commissioned by the government and tourism industry¹ projects a shortfall of around 2,000 Auckland hotel rooms by 2025 – with demand for 4,300 rooms above and beyond the 2015 level of availability and only 2,518 new rooms expected to be built over the 10 year period.

In the year to the end of September 2017, Auckland hotel occupancy levels averaged 86.9%². This number is very close to the practical capacity of a hotel¹, considering daily variations in demand and things like room maintenance, so the new developments and extra hotel capacity on the horizon are vital.

Recent figures released by MBIE³ show that international visitor arrivals to New Zealand are forecast to reach 4.9 million by 2023 - a 39% increase on last year’s arrival numbers. This growth in visitors, and an increase in spend per visitor, is forecast to drive international spend up by 52.1% to $15.3 billion over the same period. As an indication of what this means for Auckland, in the year to March 2015, the region captured 39% of all international expenditure.

Hotel accommodation is important for the city centre’s entire consumer sector encompassing dining, shopping, nightlife, attractions, events and more. A significant portion of city centre spending comes from international visitors and people from the rest of the country, many of whom stay in hotels during their time in the city. In the September 2017 quarter, our Marketview data⁴ shows that 18.1% of spending in the city centre was from international cardholders (compared to 3.4% in competing areas) and 18.7% of spending was from the rest of NZ (compared to 8.2% in competing areas).

Hotel availability is also critical in attracting major events and the economic benefits they deliver to the city. There is an element of circularity in that special events like the upcoming America’s Cup are catalysts in bringing new hotel developments to life, but the events can only be confirmed once the organisers are convinced that Auckland can provide the infrastructure required. Attendees of annual sporting and cultural events such as the NRL Auckland Nines, the ASB Classic and the Auckland Arts Festival and concerts throughout the year also attract large numbers of visitors to Auckland.

Heart of the City plays an active role in advocating for and promoting the hotels in our area. This year, we have been vocal to Auckland Council about the impact of the targeted rate on accommodation. We promote hotels and accommodation offers in the city centre via our consumer channels, and we know that our campaigns, particularly Restaurant Month, drive increased visitation (and therefore room night demand) to Auckland.

The years ahead of us are exciting for Auckland's central city. More visitors, more spending and more hotels means a more vibrant, diverse and world-class city.

1. _{Colliers International and Fresh Info Co. Regional Hotel Market Analysis & Forecasting – May 2016}
2. _{Colliers New Zealand Hotel Market Snapshot – Oct 2017}
3. _{Ministry of Business, Innovation and Employment New Zealand Tourism Forecasts: 2017-2023  - May 2017}
4. _{Marketview Heart of the City Quarterly Report: September Quarter 2017 – Oct 2017}

Recently opened

Avani, Metropolis Building
M Social, Quay Street
Grand Mercure Auckland, Customs Street
Hotel Grand Windsor, Queen Street

Under Construction

Sofitel So, 67 Customs St East – opening Q1 2018
Customs Residential, 69 - 105 Customs St East - est. opening 2018
Four Points by Sheraton, 396 Queen St - est. opening 2018
NZ International Convention Centre Hotel, Hobson St - est. opening 2018
Park Hyatt Hotel, Halsey St - est. opening 2019
Ramada Victoria, 147 - 149 Victoria St - est. opening 2019

Proposed

Civic Quarter Hotel, Mayoral Drive
Even Hotel and Holiday Inn Express, Cnr Wyndham and Albert
Wynyard 100, 100 Halsey St
Wyndham Garden Hotel, 224 Hobson St
The Pacifica, 10 - 12 Commerce St
NDG Tower, Cnr Elliot and Albert Sts

Information accurate at time of publishing (1 November 2017). Information for hotels ‘Under Construction’ and ‘Proposed’ from Emerging Auckland