Domestic travel makes up the largest portion of business travel for the majority of New Zealand businesses. Vital to this is our airline and route network, however also critical is the land components that help the domestic business traveller’s itinerary run smoothly. FCM Travel Solutions puts a spotlight on domestic accommodation demand.
Nationwide, New Zealand is running at 76 per cent occupancy with Auckland running slightly higher at 86 per cent, according to Colliers. The demand is great with 30 new hotels needed by 2025, however is likely that only 15 will eventuate. This will put pressure on accommodation providers across the country as demand continues to increase.
International visitor pressure will add also add to this, with China increasing its visa duration to New Zealand combined with an increased number of direct Chinese airline carriers.
Currently, New Zealand has one of the lowest room night prices in the world. However, this is fast increasing to be comparable to Australia. In 2017, the average room rate for 3-5 star hotels was $200 a night. By 2023, the average room rate nationwide will more to $240 a night. Wellington leads the country as the highest rate for accommodation in New Zealand, however recently Auckland has overtaken as rates continue to climb with Auckland seeing a 12 per cent increase in room rates over prior year1 . A sign of demand on Auckland both from the domestic and international markets and the lack of accommodation available.
As supply and demand issues continue to arise in the main centres, businesses are looking further afield for accommodation options. Whangarei has seen an influx of business accommodation bookings and as such, the average room rate per night has increased 27 per cent1 as demand rises.
There are some clear peak seasons surrounding business travel domestically – these include January – March and October to December.
These culminating reasons include:
- After the summer holiday period and when schools return, a lift in corporate travel is seen around late January through to March. Executives often stay for longer periods during this time as they catch up from previous months, creating a peak.
- Large events often occur during these times, which adds pressure to accommodation providers. Executives still need to travel during this time which can leave to price rises as demand grows.
- Meeting season’ for hotels falls within this period – January – April, June- July and October to December.
- Leisure demand also adds to this pressure with the country’s best weather drawing international visitors during this time also.
There is a balancing act for accommodation providers to manage their rates during peak seasons but to also utilise inventory during off-peak times. Rate increases to cover this is a delicate process of their revenue management.