GROWTH OF SERVICED APARTMENTS IN NEW ZEALAND

Abstract

A fast growing tourism industry and strong economy growth has resulted in 14.3% growth rate in international visitors arrivals in 1994. It has been forecasted that New Zealand will maintain an average of 10% annual growth to reach 2.2 million international visitor arrivals by the year 2000. As a result of increasing demand, the existing accommodation market would be confronted with an acute shortage of hotel rooms. Ernst and Young had predicted that at least another 3500 rooms would be needed. Currently, the hotel industry can provide only up to 69% of the forecasted accommodation needs. As a result, serviced apartments were introduced in New Zealand property market in early 1994. Since then, developers have taken an interest in serviced apartment development projects. The aim of this research is to assess whether serviced apartments can cater to the needs of tourist and business travelers. This research was conducted through interviews and the use of various sources of published information. A conceptual understanding of serviced apartments is provided. An attempt will be made to establish the factors that had resulted in the growth of tourist and business travelers. The types of competition faced by serviced apartments is also evaluated. The findings of this study concluded that serviced apartments can be an alternative to hotel rooms. The benefits lie in cheaper room rates and greater conveniences. Through this process of fact finding, opportunities for Singapore developers to move into this lucrative business have also been evaluated. Auckland and Wellington have been identified to have potential for more new serviced apartment projects.