Does Invercargill have a room occupancy problem?

“[January] was worse than we had forecast."

The Langlands is the newest addition to the short-term accommodation scene in Invercargill.

Invercargill’s short-term accommodation occupancy rate is in decline with Invercargill Licensing Trust’s boss saying there’s already an oversupply in the market.

And that’s before another 150-room hotel is opened in the city.

It has prompted calls for more to be done to attract visitors to Invercargill.

New Zealand’s short-term accommodation stats are collated by a company called Accommodation Data Programme.

Its latest figures show an encouraging increase in demand for Fiordland.

Although it doesn’t paint a rosy picture for other parts of the province, including the region’s main centre Invercargill.

Southland’s room occupancy rate - excluding Fiordland - was just 56.1% in January. That was a drop of over 12% from January last year.

That decrease comes despite a national increase of 3% in room occupancy rates.

ILT chief executive Chris Ramsay confirmed those stats for January mirrored what had unfolded across its Invercargill accommodation businesses.

ILT was over 600 rooms nights down when comparing January 2023 and January 2024.

“It was worse than we had forecast,” Ramsay said.

He said The Langlands Hotel numbers had increased, but its other four Invercargill accommodation businesses, including the Ascot Park Hotel and Kelvin Hotel, were down.

The Langlands opening in September 2022 has impacted overall occupancy rates given it added another 78 hotel rooms to the Invercargill market.

But Ramsay pointed out The Langlands Hotel was open in January 2023 when comparing the figures to January 2024.

“That shows the market has shrunk and demand has shrunk and we’ve got an oversupply. That’s before another 150 rooms are added,” Ramsay said, pointing to the 150-room Distinction Hotel that is expected to open in 2025.

Ramsay said there had been a noticeable slowdown in business post-Christmas which was larger than expected. Although February had provided a timely boost on the back of the Burt Munro Challenge and Southern Field Days in Southland.

“If we are specifically looking at the month of January there is every argument to say we could have mothballed a property for a month and got on better. We are never going to do that by the way, but that is just using an example that there is an oversupply in the market at the moment.”

ILT chief executive Chris Ramsay.

While the January decline was particularly noticeable, Ramsay confirmed there had already been a trend down as they progressed through 2023.

He said there had been an increase in international visitors but that did not offset the decrease in domestic and corporate visitors.

Corporate travellers made up a significant portion of Invercargill’s accommodation business.

“A whole bunch of corporates last year had limited travel policies in place when we started enquiring with some of our suppliers.

“Because everybody is doing it pretty tough from a business sector perspective, they’ve had these policies where reps might have travelled six or seven times a year, and last year we might have only seen them five times.

“When you are as reliant on the corporate market as we are that flows through to your overall occupancy. So yep, as the year has progressed it has probably got worse.”

Ramsay doesn’t shy away from his concerns about the oversupply situation given another 150 rooms are to be added to the market in 2025.

Invercargill-based Distinction Hotel owner Geoff Thomson has purchased the Menzies Building in Invercargill’s Lower Esk Street.

The former government building is now being transformed into a 4.5 star, 150-room hotel, slated to open June 1, 2025.

The former Menzies Building in Invercargill is being transformed into a 4.5-star hotel. (File photo).

Thomson has publicly stated his confidence around there being enough demand for an additional 150-room hotel in the city.

He said over the years he had wholesalers hit him up asking when he was going to build a hotel in Invercargill.

Thomson also said he felt people underestimated the tourism potential through the likes of Motorcycle Mecca, Transport World, Dig This, and other tourism assets.

Ramsay said 2025 was shaping as a good one in terms of various conferences and events earmarked for Invercargill and that would likely come at the time when the new Distinction Hotel opens.

“But if you were to look at it over the long-term, is Invercargill big enough to sustain another 150 rooms? Well, our numbers would indicate no it is not.”

“That property is going to have twice the number of rooms that we’ve added, so you would argue that the problem is about to get exponentially bigger from an oversupply perspective.

“Does that concern us? Absolutely.

“Because every dollar we make goes back to the community, so we are proud to deliver a strong bottom line to make sure that the $8 million worth of donations continue to flow through to the community.”

Ramsay has held discussions with Thompson because there is a realisation they will need to both need to look at ways to attract visitors to the city.

Is Invercargill doing enough as a city?

While Invercargill has seen a decline in occupancy rates, the figures show a much brighter outlook in Fiordland.

There’s been a 10% jump in occupancy rates from January 2023 to January 2024 as people flock back to the area after a difficult period through the pandemic.

There were close to 10,000 extra stay nights in January this year in short-term accommodation in Fiordland, compared to the same time last year.

But that hasn’t filtered through to Invercargill. Can Invercargill do more to attract more visitors to the city?

Ramsay is pretty direct when answering that.

“Absolutely,” he said.

“You don’t have to think back too long ago when we were really humming down here, we had Joseph Parker at [Stadium Southland]. We had Nigella Lawson.

“I think everyone has a part to play. Whether it’s the stadium, whether it’s Great South, the Civic [Theatre] - which I was pleased to see got SIX60 - we’ve all got a part to play to get the town going and driving events. It’s critical.

“When we came out of Covid we didn’t have enough staff and just to get the doors open was an achievement in itself. That mindset has to shift now to giving people reasons to come.

“At the moment as a city, we haven’t got enough reasons for people to come from a conference and events perspective. We’ve got to do more.

“I know from our perspective we are doing plenty to drive it and we’ve got a few runs on the board, but we are pushing singles when we should be hitting boundaries.

“We will start hitting boundaries next year, but we’ve got to get through this next 10 or 12 months before that,” Ramsay said, outing himself as a cricket tragic with that terminology.

Invercargill Holiday Park & Motels owner Phillip Todd very much falls into the camp of more could be done to attract people to the region.

Occupancy rates for holiday parks and campgrounds in Southland - excluding Fiordland - fell to 43% in January 2024. A 10% drop compared to January 2023.

Todd confirmed occupancy rates at his business had been in decline.

“It is pretty disappointing we are down to those sorts of figures when the rest of the country is up… It’s bad for the Invercargill economy, but for us, bad for everything,” Todd said.

He felt that was partly down to Southland councils fostering freedom camping sites in the region.

“It’s like anything if you give someone something for free, they are going to go to it. Every night at about 4 or 5 o’clock you will see people leaving Invercargill heading off to the free sites that the council are paying for.”

“Te Anau basin has got no freedom camping and that area is booming, but the south coast is stagnated and going backwards.”

But on top of that Todd felt Invercargill was not offering the right things to get people to stay in Invercargill.

He felt that was a job for Great South - Southland’s regional development agency - to help sort.

“The stats don’t lie. The growth isn’t there where it is elsewhere in the country. Why isn’t it happening in Southland?”.

Tourism featured heavily in the Beyond 2025 Southland Regional Plan.

The document released last year stated tourism had recovered faster than expected from the pandemic.

“A key area of focus is encouraging visitors to disperse around the region therefore managing places with pressures, but also ensuring we spread the benefits.

“Developing unique experiences, particularly those around our ‘Southland Story’ is important as is ensuring we have the appropriate infrastructure, air connectivity, and accommodation.”