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Business Opportunities in New Zealand’s Booming Tourism Industry

31 May, 2017

Tourism in New Zealand is “red hot” at the moment. The tourism industry has overtaken dairy as New Zealand’s top export earner, with nothing to suggest an imminent slowdown in the tourist boom.

In the the year ended December 2016 there were close to 3.5 million visitors.

ASB chief economist Nick Tuffley recently commented ”Pleasingly, no single individual country or region is responsible for the continued growth in tourism, offering New Zealand a degree of protection from individual geopolitical events offshore.”

Australia made up about 40% of tourist arrivals on an annual basis, followed by China at 12%, the United Kingdom 8%, and the United States 8%.

This boom is continuing to drive unprecedented growth in hotel occupancy and room rates, new research from Colliers International shows.

The rapid growth is putting the tourism industry ahead of schedule to achieve our Tourism 2025 goal of $41 billion total tourism revenue per year.

Appetite from overseas travellers is increasing at an increasing rate. According to a recent New Zealand Tourism Forecasts 2016-2022 (MBIE 2016) the annual growth rate for Chinese visitors in particular is expected to outstrip all other markets. China will be New Zealand’s largest market for spend in 2017, as well as the fast-growing. In terms of absolute volume, Australia is forecast to remain New Zealand’s largest market for arrivals over the forecast period, but growth in visitors from China outstrips all other markets. Visitor growth from emerging markets India and Indonesia will be significant, albeit from a much smaller base of visitors.

According to a recent article by Rodney Dickens, the managing director and chief research officer of Strategic Risk Analysis Limited, factors behind this boom (despite a generally high NZD in recent years) include growing per capita incomes in parts of Asia resulting in increased propensity to travel and associated with this has been many new routes being opened up between NZ and Asia and falling airfares that recently will have been driven at least partly by lower fuel costs. I would further suggest that other factors include increasing volatility such as Brexit, Trump’s election and global terrorist activity have enhanced N.Z’s reputation as a relatively safe place to visit. Dickens also says that this growth has driven occupancy rates to the highest level on record and this is somewhat belatedly flowing through to increased consents for hotels etc.

If you are interested in a hospitality and/or accommodation-based business in New Zealand, here are some South-Island businesses for consideration.

Apartments at St Clair (Dunedin) – The Majestic Mansions – approx NZ$2,390,000 for Freehold land, buildings and business – beachside!

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Catlins Whistling Frog Resort  – NZ$4,900,000 + SAV

This thriving business has a serious cash-flow with resulting bottom line profits and significant development potential.

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Lone Star Cafe & Bar (POA)

Established icon in the local (Dunedin) hospitality industry – catering to a wide range of loyal clientele including professional people, tourists, students and families. It is generally the first ‘after-match’ stop for visiting sports teams and their supporters, and is the ‘Official Club Rooms of The Highlanders’. Now enjoying a significant turnover of approx $4m and employing approx 46 staff, there are some great opportunities providing a strong platform for continued growth.

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Beach-Lodge Motels (Business only) Saint Kilda, Dunedin NZ$825,000

This is a stable cash-flow business comprising 18-units. It has outstanding occupancy with impressive returns! Being close to the popular St Kilda Beach, away from the concentrated ‘motel strip’ of George Street, and priced at an afforable level, these Motels have a loyal following that is relatively immune to economic cycles.

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Catlins Cafe NZ$540,000 for Business and Freehold Land & Buildings

This is a well-priced, hospitality-based business in a relaxed location that offers great lifestyle and access to some of New Zealand’s most stunning scenery and outdoor activities.

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Grandview Bed & Breakfast – Dunedin NZ$925,000

This is a heritage listed mansion located in the heart of Dunedin offering a lifestyle and business opportunity with a diversified mix of short (B & B) and longer-term visitor accommodation.

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Please contact me for further information on these and other opportunities.

 

 

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