A New Zealand Dominion Post article says that New Zealand hotels need to raise their rates by at least 10%, Tourism New Zealand chief executive George Hickton says.
Raising hotel room rates is central to the sector reaching its targets to boost international tourist spending by 6.5% a year till 2012, Mr Hickton said. Reaching the targets would add $2.8 billion to the sector’s income.
The forecasts, from the Tourism Ministry’s leading indicators monitor, were a challenge for the entire tourism sector but hotels were the leading contender for making more money out of tourists, Mr Hickton said.
“We’re pushing the industry quite hard to look at their pricing and highlighting the fact that returns are not increasing enough,” he said.
The figures showed international visitor spending had remained static at about $2900 a person per visit since 2004.
The issue is well known in the hotel sector, New Zealand Hotel Council chief executive Mark Oldershaw said.
“Over the last 10 years, room rates have not risen more than $10, so they are not even keeping pace with inflation,” he said.
A tendency to focus on occupancy rates, rather than yield per room, and a discount culture to keep numbers up had generated a “downward spiral” in prices.
Mr Hickton said hotels were too quick to discount their prices, and lacked confidence that the tourist numbers would keep coming.
“We also have to stand up a bit more strongly to Asian markets on price, recognising we have a quality product and can charge reasonable prices for it.”
Hotels could increase room rates by 10 per cent immediately without any effect on visitor numbers.
Intercontinental Wellington general manager David Shackleton said hotels in Auckland had about a $140 average room rate, while an Australian urban five-star hotel cost $250 a night.
But the challenge was to get a groundswell of support, because it took only one hotel to drop rates for the rest to have to follow. “You are only as strong as your weakest link,” he said.
Holiday Inn Wellington General Manager Heather Riley said hotels had improved information systems and were employing revenue managers, which made monitoring yields easier.
The days of rampant discounting had nearly disappeared and with the ability to analyse information there was little excuse for hotels to be underselling rooms.
Many said higher price sensitivity with domestic customers, who made up a significant portion of annual business, was helping to keep prices down, but Mr Oldershaw said that could not hold the sector back.
“New Zealanders may have got used to overly cheap prices, but when you consider the labour costs, furbishing costs, overhead costs, it is inevitable that these prices are going to increase,” he said.
Report by The Mole
