Sale of nine closed YHA hostels underway

The shuttered YHA hostel on the shores of Lake Takapō/Tekapo is now up for sale along with eight others in New Zealand.


The shuttered YHA hostel on the shores of Lake Takapō/Tekapo is now up for sale along with eight others in New Zealand.

The sale of nine closed hostels in New Zealand is underway.

Colliers International said on Wednesday that Youth Hostel Association (YHA) hostels – including two in south Canterbury – are being sold due to financial difficulties as a result of Covid-19.

Hostels – in Auckland, Rotorua, Wellington, Takapō/Tekapo, Aoraki/Mt Cook, Wanaka, Queenstown, Franz Josef and Te Anau – were closed at the end of 2021 and can be purchased individually or as a package.

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

* Four buildings housing YHA hostels could be sold twice in 12 months
* YHA hostels closing for last, staff laid off over Christmas

“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,” Lothian said.

“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.”

The closed YHA hostel in Aoraki/Mt Cook is now for sale.


The closed YHA hostel in Aoraki/Mt Cook is now for sale.

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.

“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 the end of the restrictions, 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.

“The YHA properties are attracting such interest because of their fabulous geographic spread. Even though our borders are currently closed, the interest we have had clearly indicates that New Zealand is still highly regarded internationally as a tourist 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.

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

“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, so these assets will offer very attractive returns in the medium term.

Colliers is seeking expressions of interest for all nine properties, with the offer closing on March 25. In total, the hostels have 410 rooms and 1320 beds. 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 in 2021 in an attempt to shore up its financial position.

Doig said private investor RPZ purchased the four properties as a long-term passive investment because it 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.