Clipped wings bring opportunity

What a rollercoaster ride this year is proving to be on the back of the unparalleled disruption 2020 dished up.

For a sector reliant on people being able to move freely across global time zones and around the country unhindered, New Zealand’s commercial accommodation and wider tourism industries have really felt the pressure.

We empathise with those businesses that have been grappling with the highs and lows of lockdowns, rule changes and the absence of international visitors.

New Zealand had it relatively easy there for a small window of time as we enjoyed benefits and privileges that others around the world did not have.

Times have caught up with us and the challenges continue.

If we didn’t already appreciate the important role that Auckland plays in the nation’s economic fortunes, we recognise it now – when Auckland’s borders are open, the rest of the country benefits.

That glimmer of hope we experienced when the trans-Tasman travel bubble opened earlier this year was fleeting, so the wider hotels, tourism and leisure sector is having to lean heavily on the domestic market to fill the void left by the impact of closed borders.

Out of necessity, New Zealanders are spending their money here as with wings effectively clipped, and holiday leave accumulating, it’s the only option on the table for now.

People still have to take holidays and the upside is that many of us are discovering the gem destinations that the country offers – without the overseas crowds and need for long haul flights.

On the sales front, Bayleys’ Hotels, Tourism and Leisure (HTL) team had a record start to the 2021/22 financial year, completing more than $190 million of commercial accommodation-related sales.

Investors and operators are active in the market and paying well for accommodation offerings, despite the uncertainties that remain in the current market.

Seasoned purchasers are still out there building portfolios and with returns of often 10-22 percent in the sector, it’s an asset class with proven resilience and opportunity.

Accordingly, there’s been a significant increase in demand for freehold going-concern properties, with the lock, stock and barrel narrative appealing to those investors looking to move money around while interest rates remain low and returns are assured under “normal” conditions.

The bulk of New Zealand’s existing commercial accommodation stock runs under the leased model, and business operators – both established and new entrants to the market – are seeing genuine opportunity for good incomes and security.

We are detecting new excitement in the market as buyers recognise that with the vaccination programme well-advanced, our freedoms – and those in other countries – will eventually return.

Long may that optimism reign because, while the pandemic can take some things away, it won’t change the long-term underlying fundamentals that New Zealand as a destination has to offer.

This edition of Bayleys’ Hotels, Tourism and Leisure features 15property and business opportunities available now around the country.

We also talk with people in the industry for their take on the current market and the sector’s fundamentals.

Enjoy the read and remember – the Bayleys HTL team is accessible and ready for a friendly chat about your business, your investment goals, the market, and its dynamics.

We’d love to hear from you.

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