Regional hotel sales signal rising demand, says Colliers

Regional hotel sales signal rising demand, says Colliers

Demand for regional hotels is on the rise following a record number of hotel sales in New Zealand's main tourism markets.

Dean Humphries, national director of hotels for Colliers International, says the recent sale of two large regional hotels comes after more than $500 million of hotels changed hands in 2015/16, the strongest period on record in a decade.

An Australian investor has purchased the 51-room Ambassador Hotel Hamilton, while an Auckland investor has bought The Park Hotel Ruapehu, an 82-room hotel in the central North Island’s National Park.

Humphries says in a media release that the Ambassador – one of Hamilton's most well-known accommodation providers – is the second hotel the Australian investor had purchased in the last 12 months.

“They see Hamilton as a key growth region both due to its status as a satellite city to Auckland and as an emerging tourist destination.”

The Park Hotel Ruapehu is one of the region’s largest commercial accommodation providers, with proximity to the iconic Tongariro Crossing and Whakapapa ski fields.

“The new owner from Auckland plans to immediately complete the remaining room renovations to the property in time for the winter ski season.”

Humphries says investors are seeking higher returning investments in emerging tourism markets, which is driving up enquiry levels for regional hotels.

“These hotels can still be purchased well below current replacement cost and at attractive yields returning up to 10 per cent on current net cash flows,” he says.

Humphries says other emerging hotspots include Hawke’s Bay, Taupo, Tauranga, Nelson and Dunedin.

“Investors have high levels of confidence in New Zealand’s hotel sector, thanks to favourable trading conditions and the huge economic benefits of the country’s ongoing tourism boom,” he says.

A record 3.5 million visitors came to New Zealand last year, and the government is forecasting 4.9 million annual visitors by 2023.

Posted: Wednesday 24 May 2017