Hostels

Buyers line up for nine YHA hostels for sale in major New Zealand tourist spots

Several overseas parties are already eyeing the nine YHA hostels which are being sold after they closed late last year due to financial difficulties in the wake of Covid.

The gradual reopening of New Zealand’s borders should spark interest.

All hostels are located in prime locations, in Auckland, Rotorua, Wellington, Tekapo, Aoraki Mt Cook, Wanaka, Queenstown, Franz Josef and Te Anau.

Properties can be purchased individually or in one package.

Colliers chief investment officer Hamish Doig, who is leading the sale on behalf of YHA, said there was already extensive investigation from potential buyers internationally, as well as Kiwi operators.

YHA Lake Tekapo.

PROVIDED

YHA Lake Tekapo.

“Overseas buyers know the caliber of these facilities and see a great opportunity to enter the New Zealand market, while tourism operators here see the opportunity to increase their footprint by partnering with private capital to help to financing.

“Now that we have more clarity on when the restrictions will end, the consensus is that there will be a big rebound in the number of international travelers wanting to come to New Zealand because it is such a popular destination.

“YHA properties are attracting such interest because of their fabulous geographic spread. Even though our borders are currently closed, the interest we have shown is a clear indication that New Zealand is still highly regarded internationally as a touristic destination.”

Dean Humphries, national hotel and tourism manager for Colliers, said pent-up leisure demand is expected to see inbound tourism to New Zealand recover to pre-Covid levels by around 2024.

YHA Aoraki Mt Cook.

PROVIDED

YHA Aoraki Mt Cook.

“We believe this ‘journey of revenge’ will be led, in part, by the younger generation who will be more comfortable traveling faster.

“Unfortunately, due to Covid, there has been considerable inventory attrition in the budget accommodation sector, particularly in tourism hotspots, and we believe there will be an acute shortage once the demand will accelerate. These assets will therefore offer very attractive returns in the medium term.”

Ian Lothian, national chairman of YHA, said the council had no choice but to close the doors permanently.

“YHA New Zealand, which traditionally serves young international visitors, has doubled its domestic overnight stays over the past 12 months by shifting its focus to more domestic groups and family stays.

“However, Auckland’s prolonged lockdown, combined with no prospect of an international visitor market this summer, created market conditions that were not sustainable for us.”

YHA Franz Josef.

PROVIDED

YHA Franz Josef.

Colliers is seeking expressions of interest for all nine properties, with the offer closing on March 24. In total, the hostels have 410 rooms and can accommodate up to 1320 people. The largest is in Wellington.

Five of the hostels are owned by YHA while it leased the other four which it sold to an investor last year in an attempt to shore up its financial position.

Doig says private investor RPZ bought the four properties as a long-term passive investment because he specifically wanted to partner with YHA but generally did not invest in hospitality.

The 17 associated properties owned and operated by individuals will continue to operate as normal. yha.co.nz

For more information, please contact Hamish Doig, +64 21 320 149, [email protected]