In the mighty spirit of ’80s metal songs, this post features two slightly different parts separated by a slash symbol. It’s partly a monthly “development update” post, and partly a sequel to a post from 18 months ago about the tourism boom.

So let’s take a look at the “development” side of tourism first. First up, a graph showing how Auckland’s hotel and motel capacity has grown over the last 20 years:

Auckland’s hotel supply grew from about 4,500 rooms in 1996 to 8,500 by 2007, and has hovered around 9,000 rooms more recently. Motel rooms have actually been declining, as motels are gradually being converted to higher-density housing, and there are around 3,500 rooms left. The general trend is for accommodation to become more concentrated in the city centre – old suburban motels just aren’t as attractive as they used to be.

So, there are 12,500 rooms at present, excluding things like backpackers, hostels and other short-term accommodation which is less ‘tourist focused’. Long story short, Auckland’s accommodation supply has changed very little for the last ten years, whereas it grew hugely in the ten years before that.

The RCG Development Tracker shows a large number of hotels which are planned, under construction or recently completed. Focusing just on those in Auckland, and ignoring the ones where construction hasn’t begun, there’s:

  • Quest on Hobson (44 rooms), completed in Q3 2012
  • Quest Beaumont (34 rooms), completed in Q4 2013
  • VR Queen Street (80 rooms), completed in Q2 2014
  • Ramada Suites Federal Street (42 rooms), completed in Q4 2015
  • Adina Apartment Hotel Auckland (159 rooms), completed in Q4 2015
  • Swiss-Belsuites Victoria Park (40 rooms), completed in Q4 2016
  • MSocial Auckland (190 rooms), the former Copthorne which closed in Q3 2015, being substantially refurbished and due to finish in Q3 2017
  • Four Points By Sheraton Auckland (255 rooms), being built and due to finish in Q4 2017
  • Sofitel So Hotel (133 rooms), being built very slowly, and due to finish in Q1 2018
  • Park Hyatt Auckland (195 rooms), being built and due to finish in Q3 2018
  • A hotel in the New Zealand International Convention Centre (313 rooms), being built and due to finish in Q2 2019

Outside of the city centre, the 38-room Quest Albany opened in 2012, the 62-room Quest Highbrook opened in 2013, the 66-room Ramada Suites Albany opened last month, the Sebel Auckland Manukau is being built and due to finish in Q3 2017. There have also been a couple of extensions to hotels out at the airport, with Hotel ibis budget Auckland Airport and Jet Park Airport Hotel having added 133 rooms between them.

So, there’s quite a few different hotel projects, but most of them have been quite small scale, especially those that have been completed so far. The Adina was the first large-ish one to be completed, and we’ve got a few more to come in the next year or two. This will take us over 10,000 hotel rooms, but this milestone has been a while coming.

As such, Auckland’s tourism sector will struggle to maintain its growth, because there’s not much new accommodation being built, and the existing providers are running at record occupancy levels – 87% for major hotels, meaning that in the last year only 13% of rooms were empty on an average night.

Tourism Boom Part 2: The Plateau

In late 2015, I wrote about the huge tourism boom NZ was going through: “essentially, the tourism sector has gone from barely keeping pace with inflation in the post-GFC period, to now be growing massively”.

We’re now at what I’d call a very high plateau, where tourism is still very strong but growth has levelled out, in large part because many tourism businesses are reaching capacity. Growing capacity can take time, most obviously for things like accommodation which can take at least a couple of years to build.

Based on the most up-to-date data, international tourists are spending $10 billion a year in New Zealand. That excludes things like international airfares and international education, which is a big industry in itself (here’s an earlier post on it).

Another graph I like is this one, which shows the average number of visitors in New Zealand on a given day:

On an average day in the last year, there were 180,000 visitors in New Zealand to go with our 4.7 million residents, although the numbers fluctuated between 120,000 last winter and 280,000 in January. The figures just keep climbing, and show no signs of slowing down (yet).

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  1. “The figures just keep climbing, and show no signs of slowing down (yet).”

    The country’s biggest earner and largely predicated on burning vast quantities of aviation fuel to get them here and back home again. Anybody else concerned about NZ’s reliance on tourism from an emissions standpoint or should we focus on a whether a small portion of the rail system should be electrically hauled on not?

    1. +1, I really struggle to decide how I feel about this. Air travel is probably the only thing we do where the alternatives are completely nothing like viable replacements. New Zealand depends very heavily on this.

      1. “New Zealand depends very heavily on this.”

        Yes, your honour, I know I said we would reduce our emissions but they offered me money; there was nothing that I could do.

        Seriously, are there any national plans to reduce emissions or are we just sorta, kinda hoping?

        1. We’re just sorta, kinda hoping no one will notice what we’re doing. And the aviation industry isn’t even part of “our” emissions … they manage to be slip between the cracks between countries. So, your honour, the increasing carbon emissions of the aviation industry has nothing to do with the tourism-promoting activities of my government at all.

        2. As alternatives to air travel are often impractical, wouldn’t mandatory carbon offsetting for airlines be the way to go? It’s not a huge expense and probably just something we have to suck up and pay for sustainability.

        3. Getting countries to agree is the problem. Europe decided to have an arrival tax; the US put paid to that.

      2. I think this is one of the reasons the aviation industry is taking such an interest in biofuels. Irrespective of what happens with climate change targets, it’s quite logical to think that demand for land transport fuels will fall dramatically at some stage as EV technology improves.

        This will make the extraction and refining of fuel much more expensive, which would drive up the costs of jet fuel.

      3. Modern airships can run on clean fuel (even solar power). They’re faster than sea-ships for cargo. As for passenger travel, we’re talking maybe 12 hours to get across the Tasman; better than nothing if there really was a massive shortage of jet fuel.

        BTW, if any replies say something dumb about the Hindenburg, my humble curse: may you be trapped in a room with mfwic and The Real Matthew for 12 hours.

        1. How many of these airships are required just to replace a single sea going container ship?

    2. Emissions and aviation/ tourism is a tricky one. And the tourism industry will have to face up to it sooner or later. GA doesn’t cover the topic that often, but I’ve done a couple of posts here and For me, international flights are definitely my biggest source of (transport) emissions.

      I had more to say but will have to come back to it…

  2. World of mouth is the most important. We don’t want to tourism NZ to advertise hype but under deliver.

    New Zealand is a distant country and people buy expensive air ticket to come here. Therefore our target market is top tier travellers.

    It is fine to charge more money, however we have to delivery a top class experience.

    We should build more high quality hotels than a lot of cheap budget motels.
    Same for our attractions, we should focus on quality than quantity.

    1. I think that you are right to some extent Kelvin. We definitely don’t need the “freedom” travellers whom it seems are just here for a free ride, essentially taking advantage of our good nature as they defecate their way around the countryside.

  3. With perhaps every other industry, value-added production is the way to go.

    With international travel it’s a bit more complicated. Anyone using international air travel is using the world’s capital asset of fossil fuel for their own benefit. Do we want the people using that fossil fuel to be boomers who are nicely settled into their value system? They are the demographic requiring the classy hotels. Or do we want the people using the fossil fuel to be young people exploring the world, questioning the beliefs of the culture they grew up in, and taking back ideas to build a “Greater [insert city name here]”? These young people don’t use the classy hotels – they use backpackers, they use the Workaway and WWOOFing schemes.

    In addition to the fossil fuel use, the tourism industry has a high percentage of casual jobs, under-the-living-wage jobs, and under-the-table jobs. Its not really benefitting NZ as a whole, just certain players.

    Those players should be contributing to the maintenance of the natural ecological base of the country, as this is what is drawing the tourists. Instead, the government is decreasing the care of the natural environment, cutting DOC funding, resulting in the loss of ranger jobs and underfunding of conservation programmes. Probably you agree with this, Kelvin, when you say:

    “Same for our attractions, we should focus on quality than quantity.”

    International boomer tourists have one advantage though: their presence might embarrass our regional bus providers into providing better facilities.

    1. Not sure I agree the tourism just benefits certain players. If we were to remove tourism completely I think we would all feel the effects, there would be less tax revenue meaning services would have to be reduced, while many people would loose jobs creating a bigger burden on the welfare system. We would also likely loose many inter-city bus services.

      It’s pretty standard for not everyone to benefit directly from an industry, it’s the same for farming, fishing, timber and mining. It’s a bit more challenging targeting tourist businesses to cover the costs of tourism as many of the them straddle multiple industries. For example motels are in the tourist industry but also benefit from business and domestic travellers.

    2. It would be good to extract the money from rich boomers to spend it on natural environment protection, as well as to pay our workers fair wages.

      The reason why workers doesn’t pay well is because the industry operate in low skill level.

      Only if the tourism industry focus on quality, they will need high skilled people.

      Since high skilled tourism professional is limited, they will be in demand, and their wage will be high and fair

      1. Whilst I agree with most of your comments, I would like to point out that ‘rich boomers’ are in fact budget boomers,as their accommodation spend is at $150 to $180.00 per night. Like with backpackers, they do spend a bit more sightseeing and attractions.

  4. The size of most of those hotels is a joke. Auckland is supposed to be an International city now. We need some 400 room towers in the CBD. Occupancy is well over 90% compared to international average around 70% so plenty of demand to soak up additional capacity.

  5. While the stat is nice, there are a few things we need to keep in mind. The rise of organisations that does not have hotelrooms for rent but instead act as facilitators, from AirBNB to other similar services focusing on specific Asian groups.
    The second is that a lot of the NZ tourism is still VFR driven and tourist don need hotelrooms because accommodation is offered by family members that have properties.

    Carbon offsetting is something that wont happen for our major industry. If something was to happen it would need to be to be at a intergovernmental level. Maybe they can lure Australia into something, but with most other destinations with non-stops routes it wont happen. It feels more like a feelgood issue for a few passionate greens than something Id run with if I was a politician. We have seen in Europe that those countries that have introduced such taxes on airtravel have in most cases been forced to retract it due to its unpopularity among the electorates.
    But for those that wants to fly and be carbon-neutral, Qantas offers the ability to offset your carbons when you book a ticket on their website. The opportunity has existed for a few years. Last data I heard had the uptake was substantially less than 1%. (So far I have not felt the need to offset anything from my travels – and I fly weekly).
    Something that definitely point to offsetting carbons not being a core concern for flyers.

  6. There has been alot written about the growth of NZ’s tourism industry and the wonderful economic benefits it brings but all the hype around this growth over shadows the actual gains tourism brings and the huge costs that is required to bring the current tourism infrastructure to meet the 5 million international tourists the government wants by 2023.

    The biggest financial yield is the 10% end tourist market whilst 60% brings a reasonable yield whilst the remain 30% being the 20 something plus backpackers and freedom campers (not having self contained vehicles) bring in the lowest yield.

    The current tourism infrastructure can cope with 1 to 1.5 million with a tops of 2 million tourists per year. Currently at 3.5 million tourists, the current tourism infrastructure is creaking and groaning under the strain and is essence NZ is starting to offering inferior tourism product.

    To upgrade the tourism infrastructure to cater 5 million tourists per year, $4-5 billion is required to upgrade roads especially in the South Island to eliminate the many one lane bridges, upgrading the DOC estate, upgrade tourist facilities in the 30 major tourism destinations that are located in very low population regions, up grading of tourism product and services, etc. With 5 million tourists, which will be the population of NZ at the time, going through the country, will see some of our iconic tourist destinations like Queenstown, Wanaka, etc lose their current uniqueness due to the construction of multi story accommodation facilties, to cater for the hordes of tourist traveling through NZ.

    The question will be, where will the money come from for this upgrade?

    Since international tourism is very fickle and couple with the fact that NZ is off the international tourists tracks, NZ needs to have a well managed eco-friendly, sustainable industry for 2 million tourists, that reflects the scenic beauty of NZ’s 15 unique geographical regions and provide quality tourism products and services instead of the supermarket tourism that is currently being offered.

    The cost to have a well managed eco-friendly, sustainable tourism industry is approximately $1 billion but it is a worthwhile investment. If we don’t do something, NZ will have an international tourism backlash, which will have a major impact on NZ’s economy and will take many years to rebuild NZ as a unique tourist destination. The warning bells are ringing and as a country, we need to act now.

  7. I can’t believe how slow the Sofitel development has been. i walk past there twice a week and it looks like they’ve made no progress in 2 years.

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