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Occupancy down but confident hotel industry builds more beds

Friday 31st January 2003

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Strong performance in the hotel and accommodation sector has been the exception rather the rule in recent times. In this month's instalment on New Zealand's most exciting companies, New River looks at businesses outperforming the crowd.

As an industry, tourism is growing strongly and it seems logical to assume that hotels and accommodation providers would be part of the boom. Indeed, Statistics New Zealand reports a healthy 22% increase in "guest nights" since 1999.

However, occupancy rates have been generally flat, averaging a steady 50% over the past three years. Room rates and yields have remained stagnant and even shrunk since the mid-1990s. Hospitality Association CEO Bruce Robertson explains the situation saying, "Development of new properties has been outstripping demand."

While the rapidly growing capacity is tough for companies in the industry, it's good for tourism. Twenty-five-year hotel industry veteran Jeff Shearer, general manager of the Heritage Hotel in Auckland, says "something akin to the food and beverage industry has been happening. Hotels have been becoming a lot more diverse and of a higher standard."

In New River's investigation of the sector, firms leading the diversity and raising of standards emerged as the best performers amid tough competition. They're not confined to a single market sector or geographic area. These high performers are from different parts of the country and range from luxury hotels to holiday parks.

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