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Hotels maintain occupancy and increase yield in 2011

Hotels maintain occupancy and increase yield in 2011
A major international sporting event, natural disasters and changes in the way people book travel all had an impact on the NZHC Central Park region hotels in 2011.

Speaking at NZ Hotel Council’s 2011 Annual Operating Survey presentation in Rotorua today, NZHC Executive Officer Rachael Shadbolt said 2011 was an unusual year. Any one of the events 2011 presented to the sector would have had a marked impact, but to have a Rugby World Cup, a series of earthquakes and a significant shift in the way people booked travel take place in the one year was unprecedented.

In 2011 Central Park’s (Taupo, Tongariro, Napier and Gisborne) 7 NZHC members:
• had a 51.9% occupancy rate which was on a par with 2010 results (51.4%).
• had the highest average room rate (ARR) of all NZHC regions $160.10, up $15.40 on 2010 ($144.70)
• generated almost $34m in revenue, from a total of 664 rooms.
• employed over 450 people and contributed $24m to the region through wages and salaries, food and beverage purchases, rates and other expenditure, up from $21.8m in 2010. Wages and salaries made up almost $12.6m of this total.
NB: this commentary excludes the Christchurch results. As a result of the earthquakes the city’s hotel room inventory dropped from 3717 pre-February 2011 to 853 rooms after the earthquake. Hotels that are currently operating have significantly increased occupancy and average room rates outside the normal range and for this reason have not been included in this summary.

Ms Shadbolt said the Rugby World Cup had an impact on the Central Park results. The towns that had RWC games achieved strong market driven room rates during the game days. These rates helped increase the average room rate for Central Park in 2011.

The RWC period brought some challenges for hotels, with significant displacement of traditional September and October business being pushed out to either side of the event. This meant that while good rates were achieved during RWC game days, hotels were very quiet mid-week as traditional corporate and conference business was practically non-existent during that time, she said.

Kathy Guy, NZHC Central Park Regional Chair and GM Wairakei Resort and Tongariro Chateau, said, “Napier hotels enjoyed the lion’s share of the RWC business with two games played in the city. Other hotels in the Central Park region hosted RWC teams and visitors and welcomed the business this delivered. Conference business was significantly down and moving the school holidays into October to align with RWC also had an impact with little school holiday business. Displacement of traditional business was clearly evident across the region but was replaced with good RWC business,” she said.

Nationwide, the 2011 annual survey highlighted the significant shift in booking patterns, with more visitors choosing to book at the last minute. This was represented by a 9 point shift to 42% of all NZHC hotel room bookings being booked less than 8 days prior to arrival. Central Park sat well above the national average on 50% and up 7 points from 43% in 2010.

“Over half Central Park’s hotel business is free independent leisure travel that tends to have later booking patterns than other markets,” said Ms Guy. “This shift does present some challenges for hotels and we are evolving our operations to accommodate this.”

Ms Guy also cautioned that as Central Park is predominantly made up of tourism destinations, the lack of international visitors over what is traditionally a busy inbound period had not produced the volumes of business that had been seen in the past but this could be attributed to a post RWC phase. The trend for short lead-in times for corporate bookings is also evident.

However, hotels remain cautiously optimistic as to what 2012 will bring.

Other highlights from the NZHC Annual Hotel Operating Survey 2011:
• NZHC members directly employed almost 11,000 permanent and casual staff.
• Christchurch achieved the highest annual occupancy of 85%; however this was off a reduced inventory base of 853 rooms compared to 3717 rooms before the February 2011 earthquake.
• Excluding Christchurch, Auckland achieved the highest annual occupancy rate of 77.1%, followed by Wellington (73.6%) and Rotorua (64.6%).
• The Central Park region (Taupo, Tongariro, Napier and Gisborne) had the highest average room rate of $160.10, followed by Auckland ($157.60) and Wellington ($150.10).
• The average room rate for 5-star hotels was $217.50, up $39.33 compared to 2010 ($178.70).
• The average room rate for 4.5 star was $148.00, up $15.90 compared to 2010 ($132.10).
• The largest individual source of business was FIT/leisure travellers - 40% of all rooms sold, down 3 points compared to 2010, followed by corporate (23%) and tours & groups (18%).
• The largest consumers of hotel accommodation in 2011 were New Zealanders (54% of all rooms sold), followed by Australians (16%).
• On average, 42% of bookings were short-term (made up to seven days prior to arrival), 33% were medium-term (8-30 days prior to arrival) and 25% were long-term (more than 30 days prior to arrival).

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