As Auckland’s hotel industry grapples with a surge in room supply and low occupancy rates, new research from CBRE uses examples of events in Australian cities to demonstrate the value an improved forward schedule of major events could provide to hotel operators and many other CBD businesses.
CBRE’s September 2024 Impact of Events on Hotel Demand study analysed hotel performance data around several major events in New Zealand and Australia between 2022 and 2024.
The results show that increased local and central government investment into citywide events has immense potential benefit for hotels, hospitality businesses, retailers, transport operators and tourism providers.
Peter Hamilton, Director of Hotels and Leisure at CBRE New Zealand, said major events are essential for stimulating Auckland’s economy at a time when growth in visitor numbers is waning as the global economic downturn bites.
“Our research shows that cities that leverage events effectively see a noticeable uptick in hotel occupancy and revenue. There are also significant wider economic benefits to the host city, as well as social benefits for residents who can enjoy a more vibrant city, a diverse mix of visitors and the general mood of excitement which major events bring.”
Hotel demand softened nationally during the 2024 winter season, with room occupancy growth stalling across the country due to weaker economic conditions locally and globally. In 2024, national hotel supply is 6.9% above 2019 levels, but occupancy rates are 11.9% lower than 2019.
In Auckland, the CBD economy has been hit by several factors including the economic slowdown, reduced consumer spending and ongoing traffic disruptions from the City Rail Link construction. Hotel demand has been trending downward since April 2024 and room rates are decreasing for the first time since borders reopened in 2022.
CBD hotels also face increased competition, with room supply 22% higher than in 2018 and a further 11% increase in room supply expected over the next five years. New hotels including the Intercontinental, Abstract, Soho and La Quinta by Wyndham, Sky City Horizon, Indigo, and Grand Chancellor are adding over 1,300 rooms to the market over 2024 and 2025 alone.
However, demand has not yet improved to pre-COVID levels, making it crucial for authorities to invest in attracting and securing a regular calendar of major events, said Mr Hamilton.
“With the additional room supply in the Auckland market, it’s a pivotal time for businesses, council agencies and central government to work together to attract more events to boost demand. The opening of the New Zealand International Convention Centre (NZICC) in late 2025 will help, but we need a broader base of regular high-profile events to fill the gap.”
Australian cities provide a good example of how strong investment into events provides wide-ranging economic benefits, said James Doolan, Strategic Director of Hotel Council Aotearoa.
“Melbourne has long been regarded as a great example of a city that invests heavily in event attraction and is reaping the rewards. Other Australian cities such as Adelaide and Brisbane are now following suit. Adelaide is slightly smaller than Auckland, but has a much more coherent strategy around event attraction than any New Zealand city.”
CBRE’s study analysed the direct impact of several recent events on Auckland’s hotel market, including sports, cultural, music, and business events.
The Pink concert in March 2024 resulted in average hotel occupancy climbing 12% higher than pre- and post-event averages, with 3,388 additional room nights sold over two days.
The World Choir Games, held from July 10 to 20, prompted a 21% rise in average daily occupancy and 21,986 more room nights sold over 11 days. This represents nearly 2,000 additional room nights sold per day during a traditionally quiet winter period.
Low-season events are crucial. Queenstown’s LUMA festival from May 30 to June 3, 2024 drove an 18% hotel occupancy increase, with 1,066 more room nights sold over the weekend, which would otherwise be quiet.
Vivid Sydney, which has grown into an internationally-recognised annual event in the May-June low season, resulted in a 9% hotel occupancy increase over the 2023 event, generating an estimated 36,891 additional room nights and $18.32 million in room revenue.
Having suitable event venues is essential for attracting major events. The current proposal to double the number of music events permitted at Eden Park, the largest concert venue in Auckland, to 12 per year could significantly increase hotel demand.
Upcoming events in Auckland, such as the Coldplay and Travis Scott concerts in October and November, and SailGP in January, are expected to further benefit the city’s hotels, hospitality providers, retailers, transport providers and tourism businesses. However, longer-term solutions are needed, said Hamilton.
“Our research figures highlight the significant impact events can have on demand. It’s not just about filling hotel rooms, it’s about boosting the entire local economy at a critical time when many businesses are suffering the effects of reduced consumer spending.”
It is critical that council and government invest in building, and actively maintaining, a regular calendar of major events and work with the hotel, hospitality, tourism and transport sectors to ensure the benefit of such events is maximised, said Mr Doolan.
“There is certainly a key role for central agencies to play in event attraction and destination marketing. A central agency can pitch for major events far more optimally than if the job is left to diverse private businesses that are otherwise competing with each other. Without a central agency taking the coordinating role for winning major events, opportunities are missed that would otherwise deliver net benefits for the entire economy.”
