Rising global tourism numbers and a return to pre-pandemic visitation are fuelling growth in the hospitality sector, particularly as property investors look to acquire prime commercial assets.
Despite muted transactional activity amidst uncertain economic conditions, the return of tourism is a bright spot for New Zealand’s economy, buoying interest in property benefitting from increased international visitation following the end of the COVID-19 pandemic.
Bayleys Auckland Capital Markets associate director Cameron Melhuish says disruption caused by the pandemic has had a devastating effect on New Zealand’s tourism sector, which was the country’s largest export industry employing circa eight percent of the nation’s workforce in the year to March 2020.
“Extended international border closures and fear of travel are well and truly now in the rear-view mirror for many operators and in New Zealand, particularly Auckland, the sector continues to bounce back with strength following Key Performance Indicators on an upward trajectory.
“Hotel night occupancy as of March 2023 exceeded 80 percent and guests are spending longer in the City of Sails, which continues to cultivate interest in commercial accommodation assets as an investment vehicle.
“Accommodation businesses now have more than 12 months of sequential figures to show purchasers and their lenders, for the first time since the start of the pandemic, making an exit and entry into the sector more straightforward, whilst also providing certainty and confidence for purchasers,” he says.
One of the year’s most significant recent hotel sales was circa $12,000,000 in a transaction concluded by Mr Melhuish, and colleague Damien Bullick, for the old nunnery-come-boutique Convent Hotel at 454 Great North Road, Grey Lynn.
The historic St Joseph’s Convent, erected in 1922, became one of the city’s most infamous properties upon the 90s closure of the abbey, falling into disrepair as a dilapidated homeless haunt once described by an Auckland City councillor as a ‘slum in the heart of the city’.
However, a transfer of ownership and extensive refurbishments has seen the property become of Auckland’s most popular boutique accommodation offerings running at total capacity virtually every night.
The property investment division of the Ranchhod Group, led by Mahesh and Tejal Ranchhod, purchased the property following an entire refurbishment. Given the challenges facing the office and retail sectors, they say the acquisition signals a pivot in the organisation’s investment strategy.
“Demand for boutique accommodation offerings is huge across New Zealand, Australia and Fiji – which are the key markets our business operates within.
“While the accommodation sector has become saturated with established hotel chains, increasingly, we are seeing consumers searching for special experiences and exceptional service in unique locations.”
“Since purchasing the Convent Hotel, we plan to extend accommodation to a separate three-storey hotel at the rear – which will support ongoing demand and the popularity of on-site Italian-influenced restaurant Ada,” says Mahesh Ranchhod, Ranchhod Group chief financial officer.
In creating Ada, the Group partnered with experienced restauranteurs Francesca Mazza and Aaron Carson, regarded across Auckland as the industry leaders behind some of the city’s favourite hospitality venues.
The result has been a perennially popular venue nestled inside the hotel with the preserved architecture of a bygone era, leaving exposed brick, rustic walls and a glass roof atrium to create a romantic, award-winning dining ambience.
“Even on quieter evenings, the restaurant is abuzz with a vibrancy seldom seen elsewhere, and Ada would make a pretty good claim as the best place to take a guest visiting from out-of-town,” Mahesh Ranchhod says.
The Ranchhod Group has recently also purchased another prime commercial accommodation premises in central Auckland, with heritage features dating back to the 18th century.
“We are incredibly excited about the new acquisition, which is a spectacular trophy asset and one of the oldest hotels in New Zealand.
“There’s a desire to protect and restore these types of heritage buildings, as they’re an important part of New Zealand’s cultural framework, telling a special story, whilst offering a tangible point of difference, increasingly attractive to visitors.”