Visitors to New Zealand could find themselves struggling to find accommodation unless the tourism sector ramps up the construction of hotels, the Government says.
A new report from New Zealand Trade and Enterprise has found 26 new hotels above what is already planned will need to be built in the next decade to keep up with growth in the tourism sector.
Commissioned as part of a government scheme aimed at boosting private-sector investment, the report says the country will be short about 4500 hotel rooms across Auckland, Rotorua, Wellington, Christchurch and Queenstown by 2025 at current projections.
Auckland alone will be short nearly 1800 rooms.
Economic Development Minister Steven Joyce said it was the first time data had been collected on future hotel demand.
"While there is significant hotel investment underway and planned, this report underlines the size of the opportunities there are to grow the sector in New Zealand," Mr Joyce says.
The research says international tourists will make up the bulk of the demand rise, growing by an estimated 5.4 percent a year, and most will be looking for four-star accommodation or better.
But Tourism Industry Aotearoa chief executive Chris Roberts said he hoped the report would attract more investors into the New Zealand hotel business, it would be a struggle given more favourable markets overseas.
"For example, Sydney's hotel occupancy rate across the year is 88 percent and the average room rate is NZ$254. Auckland's hotel occupancy rate has risen from the '70s to 84 percent, but the average room rate is still only NZ$152."
"The ability to deliver additional hotels is heavily dependent on managing a number of constraints, including financial feasibility, site availability, resource and building costs, finance and timing delays."
Wellington Regional Economic Development Agency chief Chris Whelan said it was working closely with NZTE to market Wellington as an investment opportunity.
The report found there were currently 20,000 rooms across the five main centres, and demand would rise by 9700 by 2025 - while current projects only provide about 5200.