The arrival of international visitors will see the cost of renting a holiday home reach record levels this summer, according to new data.
Latest figures from Bachcare, New Zealand’s largest holiday home management firm, show forward bookings from overseas tourists, strong domestic demand and a shortage of rental accommodation are driving a 25% increase in peak pricing.
Demand is forecast to be strongest in the Coromandel, Queenstown and Bay of Plenty for large waterfront properties offering a spa and WiFi, with local holiday homeowners set to see a significant increase in rental income in the coming months.
The data shows the top 50 holiday homes around the country earn an average of $65,000 rental revenue, with the highest earner recording $81,000 per annum.
Nick Peirce, Bachcare head of revenue, says the company has sold 31% more nights for the coming summer season than the same time last year.
He says international visitors are on track to extend the summer peak period into February, while the domestic market tends to tail off after Waitangi Day.
“Compared to the 2021/22 summer period, we have already sold around 3,100 more nights – with December up by around 52%.
“The data shows international visitors make up 15% of all summer bookings, which is similar to the pre-pandemic levels and up significantly on the negligible volumes of bookings from overseas we saw last year.
“While the 2021 season set new booking records for us, the arrival of overseas tourists could see February grow by a further 10% this year, which equates to a significant increase in income for bach owners.
“At the same time, there is a continuing strong demand from Kiwis wanting to holiday locally, which is expected to create a shortage of accommodation stock during the coming peak season,” he says.
Peirce says holiday homeowners in some regions will be able to earn up to $1,500 per night during the peak by renting their property out.
He says a property which would normally sell for $1,000 per night during the peak is now selling at $1,250.
“Pricing in this part of the tourism industry is closely tied to the availability of supply and when there is a shortage, it creates an opportunity for property owners to earn up to $81,000 per annum – with around fifth of this revenue earned in January alone.
“Our analysis shows that the ideal property is lakefront or beachfront, in close proximity to a population hub, is a larger home which caters for families or groups of friends, and has good outdoor entertaining areas and WiFi.
“Properties with a spa will earn 43% more than those without and a bach with five to six rooms will earn almost twice as much as one with three to four rooms,” he says.
Peirce says the top five earning holiday homes across the more than 2,300 homes they represent are in Mt Maunganui, Paihia, Queenstown and Te Anau.
He says for non-ski areas, 40% of total earnings are generated between December to February.
“What we can see from the latest regional data is Southern Lakes has the highest average gross rental income per property YTD at $21,324, however the top 20 properties in this region earned on average over $61,000 YTD.
“On average, a holiday home in the Coromandel will earn $13,577, with the top 20 earning on average $49,800 YTD. The highest average earning areas in that region are Whangapoua, Hot Water Beach and Kuaotunu.
“In Bay of Plenty, properties in Mt Maunganui will see an average $21,300 annual rental with the top 20 earning on average $37,600 YTD. The Mount also has the country’s top earning property,” he says.
Peirce says they are encouraging holiday homeowners to consider listing their property while it is not in use and are advising domestic travellers to make bookings as early as possible to reduce the cost of their stay.
David Aitkenhead, the owner of one of Bachcare’s most frequently booked holiday homes, says they initially purchased a holiday home to be close to family, however renting it out while they were not using it has provided a number of financial benefits.
He says hotel accommodation in his area is often at capacity and providing their property at peak times helps ease the pressure on existing infrastructure for tourists.
“Our experience with the short-term rental model has been positive. Bachcare manages the property proactively and uses a revenue optimisation algorithm to adjust the rates in response to occupancy in the area.
“Our advice to others considering the model has been to work with a company that offers local support, so that the property manager can develop a familiarity with your property. If there are any issues, they can visit and resolve them with minimal disruption to guests,” he says.