“While the lower average rate might be beneficial for consumers and economists, many hotels are cutting payroll and other costs to manage the reduced demand and avoid cash flow issues.”

The decline in domestic demand was too significant to be offset by international visitors, though there were some positive signs of recovery in international arrivals.

Non-New Zealand resident arrivals increased by 2% year-on-year, reaching 88% of pre-Covid levels.

Arrivals from China reached 86% of 2019 levels, while those from Australia reached 90%. Hotels reported a 17% increase in rooms occupied by international guests, totalling approximately 33,000 rooms, with about 13,000 occupied by residents from China.

This highlights the importance of the Chinese market, especially during the off-season.

Auckland and Wellington hotels experienced the most significant declines, with RevPAR dropping by 14.9% and 14.1%, respectively.

For Auckland hotels, this was 9% below June 2019 levels, following an additional supply of approximately 900 rooms (6.5%) over the past 12 months.

Horwath HTL says the increased supply, planned before Covid-19 and in anticipation of the NZ International Convention Centre opening, has heavily impacted Auckland hotels due to ongoing NZICC delays and a lack of major events during the winter months.

However, one hotel that has enjoyed better high occupancy at times puts it down to some “unique groups” and delegations during the first half of winter.

Cordis Auckland hosted Chinese premier Chinese premier Li Qiang and his delegation.

“There have been some quieter times in between, which is typical of Auckland during winter,” said Cordis managing director Craig Bonnor.

“The past two winters were buoyed by ‘revenge travel’. That’s over now and what we see this year is a return to typical Auckland seasonality,” he said.

This seasonality can be overcome to an extent by layering in major events.

“Directing resources to securing major events for Auckland in the April to October period will boost the wider visitor economy of hospitality, transport and retail.”

In Christchurch, RevPAR fell below 2023 levels for the first time this year, with a 5% decline in room nights sold and a 3% decline in the average daily rates, the Horwath HTL report said.

This includes a significant drop in conference-related business, which had been a strong contributor since the opening of Te Pae.

Wellington’s ADR dropped by 9.1%, bringing the year-to-date decline to 8.5%, driven by weaker government related business, increasing competition in other market segments.

Nelson and Marlborough was the only region reporting a RevPAR increase, attributed to improved meeting and conference business, which boosted both occupancies and the average daily rate.

”Amid the focus on the recovery of international markets in the tourism sector, June serves as a strong reminder of the importance of the domestic economy for New Zealand hotels. It also highlights the need for more events and marketing of tourism product that attract both domestic and international visitors during the winter months,” the report said.

Grant Bradley has been working at the Herald since 1993. He is the Business Herald’s deputy editor and covers aviation and tourism.