Thursday, March 15, 2012

Is New Zealand's Accommodation Over-priced?

OTA's have a wealth of data that can be padded into interesting press releases that lazy journalists can easily cut and paste into newsworthy items after adding some pithy localised observations and comments.

The Hotel Price Index is a regular survey of hotel prices in major destinations across the world. The index is based on bookings made on and prices shown are those actually paid by customers per room night (rather than advertised rates). Approximately 142,000 properties in more than 19,800 global locations are used in the survey results.

This is a great publicity branding exercise by that are able to freely place their website address across worldwide MSM, websites and blogs (including this one!).

We have been following the media reports about this year's survey and in particular the reaction to the reported 32% average tariff increases recorded in Christchurch. 

Pleasingly, the average room rate in New Zealand for the 2011 year climbed 13% to $NZD132 in contrast to the global increase of 4%.

The optimism of the Rugby World Cup held between September and October 2011, a strong currency and the ripple effects of the Christchurch earthquake all helped drive up prices across New Zealand, especially in venue cities where events were held.

The biggest rise in average tariff came in Christchurch with tariff rising by 32% to $130. Misinterpretation of this increase has prompted howling in the media with accommodation operators accused of profiteering. Without the benefit of context, Christchurch has been singled out in headlines unfairly.

It must be remembered that Christchuch's high percentage increase has come from a very low base. In 2010, Christchuch's average tariff was recorded by at a miserly $98.00 at a time when most local accommodation providers were struggling and heavy discounting prevailed.

The Christchurch earthquake in February 2011 was a significant event that heavily reduced the supply of beds and dramatically altered the mix of accommodation types available. After the earthquake, up to a third of the usual beds available were taken out of the supply chain. The beds sold in 2010, were very different to the beds sold in 2011.

Partly buoyed on by the optimism of the Rugby World Cup, there were also big increases in Wellington, up 15% to $126, Rotorua up 10% to $109, Auckland up 9% to $132 and Dunedin up 5% to $114. 

Hamilton was the best-priced place analysed in the survey despite a 13% rise to $107 and the most expensive location was Taupo at $158.

In spite of New Zealand experiencing higher than average tariff increases, it must be remembered that this country's accommodation still resides at the lower end of the world scale of comparable tariff and presents extremely good value.

Average hotel prices by city destinations in NZD, ranked in order of price point

Average room prices and changes by country in NZD, ranked in order of price point
The challenge for accommodation providers is to ignore the cloth-cap wowsers that incorrectly claim that New Zealand is pricing itself beyond the reach of overseas tourists and to continue the trend of increasing tariff. 

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