New Zealand losing new business due to hotel ratesby lesley - March 27th, 2017. Filed under: Member Updates, Updates, What's New?.
Inside Tourism – Wed 22 March 2017
DESPITE international holiday arrivals being up 15 percent in the year to January NZ is losing up to 20 percent of new business – thanks to a shortage of hotel rooms.
As a result TEC inbound members called a meeting with hoteliers and revenue managers to discuss the lack of hotel inventory and pricing in Auckland, Rotorua and Queenstown.
TEC CEO Lesley Immink tells IT there was general recognition by all that wholesale, corporate, crew, groups and FIT business was up but limited hotel inventory and price increases, were contributing factors re the substantial loss of business for the season.
“The word from offshore trade was that NZ had reached its ceiling for accommodation pricing and careful consideration needs to be had re more price increases,” she says.
“NZ is now viewed as a very expensive destination compared to Europe and others parts of the world and we need to check our value proposition re price, such as paying 5-star prices for a 3 -star hotel, and the ability to complete itineraries.
“Not being able to complete an itinerary with our key destinations and attractions included is akin to a Kiwi wanting to travel to France but not able to visit Paris, Nice or the Beaujolais wine region – so instead they visit Germany.”
During Chinese New Year, it was reported that some product suppliers in Rotorua and Queenstown did not receive as many visitors and that spend was down. That also related to accommodation pricing as less disposable spend available to participate in attractions and activities.
“It’s the law of unintended consequences and while in the first instance high rates affect group tours and inbound clients, it has also affected product supplier profitability. “
Hoteliers told the meeting they have been releasing more wholesale rooms to trade but that the demand from ITOs and across other sectors was high and that there were not enough rooms to feed the demand, which leads to premium pricing.
“Hotels indicated that ITOs should be preparing for dynamic pricing with static pricing on the decrease and not likely to change in the future,” Ms Immink says.
“Feedback from ITOs illustrated that at times multi rooms have been available online and that some offshore agents are finding the rooms at less than the wholesale rate online which is very frustrating and damages the ITO’s reputation. This is a serious issue as once offshore travel trade stop selling NZ it hurts the relationship with offshore wholesale and retail chains who spend a lot of money and effort in promoting NZ on our behalf.”
Also of concern is the proposed Auckland Council commercial accommodation targeted rate. “ITOs are concerned for themselves and the accommodation sector should this be passed by Auckland Council. Accommodation owners and providers would need to pass on the rates increase and TEC members are not confident that offshore travel trade and consumers would be able to take any more price increases. “TEC is preparing a submission stating their support for the accommodation sector and the impacts of higher price increases to Auckland and NZ as a destination.