Published on
August 17, 2025
Hotel industry of Rotorua was the stand-out performer during the second quarter of 2025, a recent industry report by the Colliers Hotels team has found. Rotorua’s RevPAR leapt 31% in May last year compared with May 2024, which added to a 15% rise in RevPAR across the quarter.
Rotorua’s Hotel Market Sees Significant Growth in Q2 2025
This boost was largely driven by TRENZ, New Zealand’s largest tourism trade event, which took place in Rotorua in May. The event attracted around 1,200 tourism operators, travel buyers, and industry leaders, significantly stimulating the local tourism sector and hospitality market. The conference’s success highlighted Rotorua’s growing role as a hub for business tourism and international events.
Mixed Performance Across New Zealand’s Major Tourism Cities
While Rotorua saw impressive growth, other regions had a more mixed performance. Queenstown, another major tourist destination in New Zealand, finished the quarter with an 8% increase in RevPAR compared to the previous year. However, the market saw a softer domestic demand in June, marking a rare down month.
The hotel market in Auckland faced challenges due to an oversupply of rooms. The opening of Hotel Indigo in April 2025, which added 225 rooms to the market, contributed to a nearly 7% drop in Auckland’s RevPAR for the quarter. According to Derrek Anderson, Director of Hotel Brokerage and Advisory at Colliers, Auckland’s oversupply situation will likely persist for the next few years. “It will take several years for the demand to catch up to the supply in Auckland,” he stated, emphasizing the need for a rebound in tourism and growth in the events sector, particularly with the upcoming opening of the New Zealand International Convention Centre.
Tourism Trends and the Path to Recovery
The tourism sector in New Zealand is on a recovery path, with international visitor arrivals increasing by 5.2% in the year ending May 2025, compared to the previous year. However, the total number of visitors only reached 86% of pre-pandemic levels. According to industry estimates, New Zealand’s tourism market is expected to fully recover to 2019 levels by March 2027.
India and the United States are showing strong growth as tourism markets for New Zealand, but Chinese tourist arrivals remain significantly below pre-pandemic levels, which is a key area of focus for recovery. Australia continues to be New Zealand’s largest tourism market, with visitor numbers from across the Tasman Sea approaching 2019 levels.
Outlook for Hotel Investments and Valuation Growth
Looking at the hotel investment landscape, collapsing interest rates in New Zealand may support hotel valuation growth. Experts believe that potential rate cuts by the Reserve Bank later in the year could encourage further investments in the hotel sector, particularly as the country’s tourism recovery continues.
In addition to the expected rise in international tourist numbers, hotel transactions in New Zealand are expected to increase as investors are more inclined to acquire properties in a growing market. This will likely continue to drive the recovery of the hotel sector.
Rotorua’s Hotel Market Leads, But Challenges Remain
While Rotorua is the top-performing region during the first half of 2025, the remainder of New Zealand’s tourism market is seeing a more dichotomous performance. The Auckland tourism recovery is threatened by overcapacity, and the industry continues to strive to get its full steam back from the pandemic. Nonetheless, with robust tourism development in India, the US, and Australia, coupled with a favorable outlook for investment, New Zealand’s hotel market future is looking good. International events and tourism expansion continued focus will most likely contribute substantially to balancing the market and ensuring sustainable tourism development in the forthcoming years.
