Hospitality sector key to economy, regional growth, and jobs

New research has reinforced the scale and strength of New Zealand’s hospitality industry, highlighting its vital role in driving jobs, growth, and productivity.

The Hospitality State of the Nation 2025 report, commissioned by Hospitality New Zealand (Hospitality NZ) and authored by economist Shamubeel Eaqub, reveals the sector generated $21.4 billion in revenue in the year to March 2025, supported more than 220,000 jobs nationwide, and is now lifting national productivity.

A major employer and economic driver

According to the report, hospitality – which includes both food services and accommodation – contributes 5 percent of GDP through sales and over 2 percent directly, cementing its position as one of New Zealand’s largest and most dynamic industries.

The sector directly employs 193,000 people, or 6.7 percent of the nation’s workforce, with a further 28,000 jobs supported through suppliers. In total, hospitality accounts for 7.7 percent of all jobs across New Zealand.

Eaqub’s report also charts the turbulence of recent years, shaped by pandemic restrictions, cost-of-living pressures, rising interest rates, and a slowing economy. While early forecasts suggested recovery in 2025, the rebound has been slower to arrive.

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Resilience and growth amid challenges

Despite headwinds, the report finds the number of hospitality businesses has continued to grow, creating a highly competitive environment with operators vying for a largely stagnant pool of consumer spending.

Short-term rentals are also reshaping the accommodation market, intensifying competition for traditional operators.

A key finding, however, is that hospitality is no longer a drag on productivity. Once considered a low-productivity industry, the sector has recorded average annual productivity growth of 1.6 percent over the past decade, outpacing the national average of 0.5 percent.

“It means that when the sector grows, it improves the overall productivity of New Zealand,” the report notes. “This is good news and should be celebrated.”

Looking ahead

The report points to stronger years ahead, with Reserve Bank and Treasury forecasts signalling economic recovery from 2026. Lower inflation and interest rates are expected to unlock growth opportunities for the sector.

Nick Keene, Acting Chief Executive of Hospitality NZ, said the findings reinforce the sector’s significance.

“The Hospitality State of the Nation 2025 report shows hospitality is a major employer, a driver of regional economies, and now a proven contributor to productivity growth,” Keene said.

“Despite the challenges of recent years, our sector continues to grow and adapt. We should be proud of hospitality’s resilience, and confident in its future.”

Hotel Council Aotearoa (HCA) Strategic Director James Doolan agreed, calling the announcement “exactly the kind of strategic support HCA has long championed.”

“Events are powerful economic drivers that stimulate visitation, fill hotel rooms and energise local communities,” he said. “The Events Attraction Package, Events Boost Fund and Regional Tourism Boost Campaign will help New Zealand compete globally and deliver tangible benefits to Kiwi businesses and workers.

“Smart investment in event attraction and destination marketing delivers positive returns for taxpayers and ratepayers, with tourism contributing more than $1.7 billion in GST last year alone. This is potentially a turning point for New Zealand’s tourism industry.”

Hospitality NZ, TIA and HCA have confirmed they will work closely with government to support the implementation of the strategy and help deliver a strong pipeline of world-class events.