New Zealand: one of the early success stories of recovery around the world
Travel restrictions and lockdown measures in response to the COVID-19 pandemic forced widespread hotel closures and unprecedented performance declines around the globe. Asia Pacific countries have been no exception to the trend, but some of the region’s nations stand out in the earliest phases of industry recovery. New Zealand is one of them.
An early recovery success story
New Zealand posted an indexed Running 7-day average of demand as low as 23% compared to the same seven-day period the prior year.
The country’s recovery from COVID-19 began in June and was noteworthy through the school holiday period as a strong resurgence and confidence was born from a prolonged period without community transmission of the virus. The occurrence of the latest cases in August saw the lines converge again.
Latest restrictions impact occupancy
The graph below shows absolute occupancy and provides a glimpse through the two important destinations of Auckland and Queenstown. The grey areas define the restriction enforced periods and visually demonstrate how challenging the lockdown periods were and then again how the latest lockdown period has hurt. Queenstown, for now reliant on New Zealanders wanting to experience some fun and relaxation, is much more variable, whilst Auckland which has benefited as the central isolation hub, is more consistent in its occupancy.
New Zealand development boom
Before the COVID-19 outbreak, New Zealand was in the middle of a development boom. Among markets in New Zealand and Australia, Auckland faces the greatest challenge with 21% of its existing supply represented in new room construction. This is Auckland’s highest construction level in the last 15 years. For comparison, Queenstown shows 14% of its existing supply in new rooms under construction.
However, with uncertainty remaining around the pandemic, and many projects still in the planning phase, we could see a decrease in future development numbers.
Over the next 12 months, short-term benefactors will be those markets able to attract leisure demand, as we’ve seen in other regions of the world like Europe. However, those markets reliant on international travel and group-heavy markets will be facing immediate challenges.