Wednesday, February 18, 2009

How's was trade in January?

After enduring camping and staying with the Mother-in-Law, Frank wished he had spent the holidays with his family at a motel!

We suspect that the headline that tourism has been "still steady in January" mentioned in our previous post is somewhat optimistic.

For many accommodation businesses, January is the busiest and most critical month when the majority of operators maximise high occupancies and average tariff. This coincides with the great New Zealand close down, when 4 million Kiwis go on holiday.

We have predicted that January '09 will prove to be softer than January last year.

In our own survey we have concluded that demand in January was not as intense as it has been in previous years with unprecedented gaps appearing in
accommodation booking sheets.

Media attention appears to be focused on international tourism numbers however the majority of motels rely on domestic tourism (particularly over the December and January holiday period). The mix of visitors have changed somewhat, however the greatest change over this holiday season has been the absence of the traditional Kiwi middle class family group of Mum, Dad and 2-kids.

This subset are New Zealand's new beneficiaries, the middle-class "Working for Families" subsidised honky family appear to be the most conservative and are not confident to load up the credit card with motel accommodation at the beginning of an uncertain year.

Anecdotal evidence suggests that this subset still had a break, but downgraded their accommodation choice by staying with friends and family or at camping grounds/holiday parks.

For the year 2008, motels lost market share to hotels and caravan parks/camping grounds and is no longer the preferred option for the majority of travelers.

The motel industry needs to
do some serious navel gazing to establish how this has occurred.

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