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Income and Expenses

Revenue per unit

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2020 2021 2022 2023 2024 2025
  Median 32905 27977 29582 39282 40239 37764
  Sample 166 157 154 181 148 79
When the March 2024 results were published last year, the sample size was 94 and revenue per unit was just under $40,000 excluding GST. The current report includes 148 samples for 2024 and shows revenue per unit slightly above $40,000, which supports that earlier result. Revenue for the year to March 2025 is recorded as $37,764 per unit, marking the first post-Covid year on year decline. This may change as more samples are added. However, winter 2024 was widely reported as a difficult trading period for many businesses during the technical recession. The Reserve Bank Inflation Calculator suggests that room rates from 2020 to 2025 have broadly kept pace with inflation. However, operating costs appear to have risen faster, reducing profit margins in recent years. Building costs have also increased well above the rate of inflation over the same period, making new accommodation developments increasingly difficult to justify financially.

Rent per unit

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2020 2021 2022 2023 2024 2025
  Median 9631 7846 9365 9548 10218 11073
  Sample 123 122 114 138 116 63
With the exception of March 2021 reflecting Covid related discounts, rent per unit has remained reasonably level, with modest growth in recent years. We are currently seeing a higher than usual number of rent reviews taking place, with a number of lessors looking to “catch up”, so future results may reflect this.

Rent as a percentage of Revenue

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2020 2021 2022 2023 2024 2025
  Median 28.61% 28.21% 30.22% 24.16% 24.44% 28.09%
  Sample 123 122 114 138 116 63
Rent as a percentage of revenue showed a noticeable decline in the March 2023 and 2024 years. Since rent per unit surveyed did not actually decrease, this movement is explained by increasing revenue per unit while rent remained at existing levels pending rent reviews. We are aware that there has been more rent review activity than usual over the last couple of years, as lessors seek to catch up after extended periods of flat rentals. The 2025 result is now closer to the longer term average, at around 30% of revenue. It is also important to note that rent reviews are often implemented partway through a financial year, so the full impact of increased rents may take more than one financial year to be fully reflected in the results.

Rent to Profit Ratio

Profit calculated before payment of rental, then rental reported as percentage of that profit

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2020 2021 2022 2023 2024 2025
  Median 52.45% 50.06% 54.09% 42.85% 42.78% 51.24%
  Sample 123 122 114 138 116 63

Energy Costs

Electricity and / or Gas - Diesel (Non Motor Vehicle)

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2020 2021 2022 2023 2024 2025
  Median 3.47% 3.53% 3.55% 3.16% 3.35% 3.89%
  Sample 163 157 154 181 148 79

OTA Commissions

Travel Agents – Booking Sites

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2020 2021 2022 2023 2024 2025
  Median 4.00% 3.03% 3.49% 4.38% 4.84% 5.32%
  Sample 145 139 129 148 120 69
OTA costs continue to rise, and we suspect that the figures shown here understate the true level. This may be because some operators do not code these commissions separately and instead report revenue net of those commissions. However, the OTA costs are fully captured when viewed as part of total operating costs: if revenue is reduced by commissions, then operating costs expressed as a percentage of that reduced revenue will be higher.

Promotion and Marketing

Advertising (including sponsorship), website and related costs, group commissions and marketing and franchise fees, (excluding OTA commissions)

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2020 2021 2022 2023 2024 2025
  Media 0.83% 0.69% 0.59% 0.41% 0.36% 0.30%
  Sample 152 145 137 157 124 63
The reduction in general advertising costs is likely due to the increase in OTA bookings and a growing reliance on those platforms to generate business. Many of the traditional hard copy and relatively expensive advertising channels used in earlier years are no longer part of the mix.

Rates per unit

Includes: Water & Refuse Rates where applicable

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2020 2021 2022 2023 2024 2025
  Median 912 940 977 1094 1241 1353
  Sample 153 148 146 171 140 76
Rates per unit have risen by just under 50% over the last six years, while inflation over the same period has been only about 24%.

Insurance per unit

Insurance. Including Land & Buildings – Liability – Business Interruption – Chattels

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2020 2021 2022 2023 2024 2025
  Median 780 797 786 949 1071 1205
  Sample 160 155 150 179 145 76
Another expense category where costs have risen significantly more than inflation – up over 54% in six years from 2020.

R&M and Replacements

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2020 2021 2022 2023 2024 2025
  Median 3.33% 4.16% 3.79% 3.96% 3.74% 3.40%
  Sample 163 157 154 180 148 78
This category includes repairs, maintenance, and replacements or renewals of assets under $500—for example, crockery, cutlery, and linen. As a percentage of revenue, this expense is lower than expected, and we believe it may be slightly understated. Possible reasons include that payments into maintenance funds may not have been treated as expenses, and reimbursements from such funds may not have been treated as income. (Leases that actually operate such maintenance funds are in the minority, so the impact on the overall results should be limited.) It is also worth noting that upgrades treated as capital expenditure are not recorded as expenses in the Profit and Loss Accounts.
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