Sudima is closing its new five-star, 80-bed hotel, Sudima Christchurch, situated in the central city, in mid-May. More than half of New Zealand’s hotels are estimated to be closed, and maybe as many as two-thirds, as the impact of coronavirus Covid-19 shuts trade.
The news comes as the biggest domestic hotel chain Scenic Hotel Group reveals it is closing two hotels, one on Dunedin and the other in Franz Josef, for 18 months and has others closed in the short term.
Hotels specialist at Colliers International Dean Humphries said their survey in early April of just over 200 of the large hotels in the five main tourist regions showed 33 per cent temporarily closed.
Others were still open because they had a few customers that were overseas people stuck in New Zealand trying to get home, but they were departing and some were essential services workers.
“Anecdotally we would suggest over 50 per cent now and particularly in regions like Queenstown and pure leisure regions. Pretty much everything is closed in Rotorua and I would suggest 80 per cent to 90 per cent of hotels are closed in Queenstown.”
Colliers would resurvey the hotels in a couple of weeks.
“And I imagine that number would have risen significantly. We would probably be well over 50 per cent, possibly as high as two-thirds I think will be closed,” Humphries said.
Most of Rotorua’s hotels are closed as Rotorua is highly reliant on international tourism visitors.
Les Morgan, chief operating officer of Sudima Hotels and Hind Management, the company running the Sudima hotels, said it had closed Sudima Rotorua for anything from three to 18 months.
It would also be closing its new five-star, 80-bed hotel, Sudima Christchurch, in the central city in a month’s time.
The guests in Rotorua were largely international tourists with little corporate or business trade at Sudima Rotorua, a large hotel with 250 beds.
Sudima’s decision to close the Rotorua hotel was based on the assumption that New Zealand’s borders would be closed to international tourists for 18 months.
The company had a team of a dozen staff carrying out maintenance and cleaning at the hotel and had also installed some hurricane fencing between hotel wings to keep people from moving around the building.
Colliers hotel specialist Dean Humphries estimates more than 50 per cent of our hotels are closed.
Morgan said Sudima Christchurch was five-star and more appealing to international visitors so it would be closed for six to 18 months also but he expected it to come back online before Sudima Rotorua. Sudima Christchurch was open for another 28 days because it had an isolation facilities contract with Government.
Sudima Christchurch Airport and Sudima Auckland Airport were both running isolation facilities under contract to the Government.
It has three hotels under construction. Sudima Auckland CBD was four months from completion and expected to open to a “soft market”. Sudima Kaikoura would open in March 2021 with the market there also expected to be soft. Sudima Queenstown was 20 months from completion and by that time the tourism market might be in better shape, Morgan said.
Humphries said the industry did not expect trade to resume in hotels until alert level 1. The tourism industry was hoping that by the third quarter of this year starting in September that’s where the country would be.
As for proposed hotel projects, most were likely to be postponed or mothballed, Humphries said. “Any proposed hotels it would be extremely unlikely they will now commence in the short term.”
Humphries said Colliers was pretty close to the projects and a lot of the proposed hotel projects would no longer be economically viable.
“There were numerous hotels proposed around the country and I would be very surprised if any of those get off the ground in the short term. Some of them will just probably be deferred and I would think some of them would be mothballed,” Humphries said.
Others who were building hotels now were well into their projects and had good lines of funding. They might open half of the hotel when it was completed and open the rest later when demand picked up. A number of those hotels did not open til 2021 and 2022.
Most hotels at the moment were in “significant strife’ with no income but hefty outgoings. While the tourism industry appreciated the 12-week wage subsidy it needed a significant stimulus package from the Government to survive up to 18 months.