New Zealand Hotel rates 10% too low
A New Zealand Dominion Post article says that New Zealand hotels need to raise their rates by at least 10%, Tourism New Zealand chief executive George Hickton says.
Raising hotel room rates is central to the sector reaching its targets to boost international tourist spending by 6.5% a year till 2012, Mr Hickton said. Reaching the targets would add $2.8 billion to the sector’s income.
The forecasts, from the Tourism Ministry’s leading indicators monitor, were a challenge for the entire tourism sector but hotels were the leading contender for making more money out of tourists, Mr Hickton said.
“We’re pushing the industry quite hard to look at their pricing and highlighting the fact that returns are not increasing enough,” he said.
The figures showed international visitor spending had remained static at about $2900 a person per visit since 2004.
The issue is well known in the hotel sector, New Zealand Hotel Council chief executive Mark Oldershaw said.
“Over the last 10 years, room rates have not risen more than $10, so they are not even keeping pace with inflation,” he said.
A tendency to focus on occupancy rates, rather than yield per room, and a discount culture to keep numbers up had generated a “downward spiral” in prices.
Mr Hickton said hotels were too quick to discount their prices, and lacked confidence that the tourist numbers would keep coming.
“We also have to stand up a bit more strongly to Asian markets on price, recognising we have a quality product and can charge reasonable prices for it.”
Hotels could increase room rates by 10 per cent immediately without any effect on visitor numbers.
Intercontinental Wellington general manager David Shackleton said hotels in Auckland had about a $140 average room rate, while an Australian urban five-star hotel cost $250 a night.
But the challenge was to get a groundswell of support, because it took only one hotel to drop rates for the rest to have to follow. “You are only as strong as your weakest link,” he said.
Holiday Inn Wellington General Manager Heather Riley said hotels had improved information systems and were employing revenue managers, which made monitoring yields easier.
The days of rampant discounting had nearly disappeared and with the ability to analyse information there was little excuse for hotels to be underselling rooms.
Many said higher price sensitivity with domestic customers, who made up a significant portion of annual business, was helping to keep prices down, but Mr Oldershaw said that could not hold the sector back.
“New Zealanders may have got used to overly cheap prices, but when you consider the labour costs, furbishing costs, overhead costs, it is inevitable that these prices are going to increase,” he said.
Report by The Mole
John Alwyn-Jones
Vegas’s Billion-Dollar Secrets – What They Don’t Want Tourists to Know
Visit Florida’s New CEO Bryan Griffin Shares His Vision for State Tourism with Graham
Chicago’s Tourism Renaissance: Graham Interviews Kristin Reynolds of Choose Chicago
Graham Talks with Cassandra McCauley of MMGY NextFactor About the Latest Industry Research
Destination International’s Andreas Weissenborn: Research, Advocacy, and Destination Impact
Graham and Don Welsh Discuss the Success of Destinations International’s Annual Conference
Graham and CEO Andre Kiwitz on Ventura Travel’s UK Move and Recruitment for the Role
Brett Laiken and Graham Discuss Florida’s Tourism Momentum and Global Appeal
Graham and Elliot Ferguson on Positioning DC as a Cultural and Inclusive Global Destination
Graham Talks to Fraser Last About His England-to-Ireland Trek for Mental Health Awareness
Kathy Nelson Tells Graham About the Honour of Hosting the World Cup and Kansas City’s Future
Graham McKenzie on Sir Richie Richardson’s Dual Passion for Golf and His Homeland, Antigua
ADS PRO 
Airbnb eyes a loyalty program but details remain under wraps
Airlines suspend Madagascar services following unrest and army revolt
Qatar Airways offers flexible payment options for European travellers
Air Mauritius reduces frequencies to Europe and Asia for the holiday season
Major rail disruptions around and in Berlin until early 2026