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New Zealand’s hotel construction industry is facing a severe crisis as the demand for skilled labour falls far short of what’s needed. Numerous developers and construction firms are currently under immense pressure to keep up. The shortage of workers is pushing costs through the roof and causing major delays, posing serious challenges for completing hotel […]
New Zealand’s hotel construction industry is facing a severe crisis as the demand for skilled labour falls far short of what’s needed.
Numerous developers and construction firms are currently under immense pressure to keep up. The shortage of workers is pushing costs through the roof and causing major delays, posing serious challenges for completing hotel projects on time and within budget.
A report by BDO found that about 80% of the firms surveyed identified access to labour as a major challenge for their operations.
Similarly, research from the Infrastructure Commission highlights a significant long-term workforce issue, estimating that New Zealand’s infrastructure workforce must expand from approximately 40,000 to 97,000 over the next 30 years to meet rising infrastructure demands. This article discusses how labour shortages affect hotel construction costs and timelines and what Kiwi construction firms and employers can do to mitigate this crisis.
The COVID-19 pandemic exacerbated an already strained labour market by drastically reducing the influx of foreign workers, who traditionally filled many essential roles in the industry. This has pushed the labour shortage in Aotearoa’s construction sector to a critical point. Tighter border controls further reduced the workforce, leaving many projects struggling to find the manpower they need.
According to Nick Innes-Jones of BDO, the country is facing a shortage of approximately 30,000 construction workers, particularly in trades such as carpentry, plumbing, and electrical work.
The surge in hotel development, especially in regions like Auckland and Queenstown, is exacerbating this issue. Unfortunately, the available workforce is unable to meet the increasing demand, resulting in a significant bottleneck that drives up costs and slows down progress.
There is intense competition among contractors due to the shortage of skilled workers, leading to skyrocketing wages. Employers are now paying 20-30% more for qualified tradespeople, such as carpenters and electricians.
The wage increase is placing significant financial strain on construction companies, which are forced to pass these costs onto developers. In hotel construction, where budgets are often tight, these additional expenses can seriously jeopardise the financial viability of projects.
The shortage of workers also means existing teams are taking on heavier workloads, leading to more overtime and a greater reliance on subcontractors. While overtime helps to push projects forward, it also inflates labour costs. Hiring subcontractors tends to be more expensive and adds further complexity to project management, particularly when coordinating across different teams.
Labour shortages are causing widespread delays in hotel construction projects, in addition to creating financial strain. These builds require careful coordination, as trades need to work in sequence to keep the project on track. However, the shortage of workers has slowed down many of these critical steps.
Construction managers report that hotel projects in Auckland and elsewhere have been significantly delayed because of bottlenecks in critical areas such as framing and roofing. The shortage of carpenters and roofers has brought many projects to a near standstill, with entire phases of development waiting on these essential tasks to be completed.
The delays not only impact completion times but also increase overall costs. Every extra day a project is delayed adds to holding and financing costs for developers, making it even harder to stay within budget. Ritesh Mani, the director of Eco-Smart Homes, noted that “the longer these delays continue, the greater the risk that overall project costs will exceed initial projections.”
Many builders in New Zealand are finding ways to adapt to the current labour shortage. A growing number of construction firms are investing in training and apprenticeship programmes to develop more skilled workers. While this is a long-term solution, it’s essential to address the shortage.
Technology is increasingly helping to address the shortfall in labour. Construction firms implementing modular building techniques, such as 3D printing homes and panelised construction, are reducing the need for large labour teams. This efficient approach not only minimises manpower requirements but also accelerates the construction process.
Some firms are considering hiring international workers to fill the labour gap, although this remains challenging due to current immigration policies. Nonetheless, bringing in skilled labour from overseas is viewed as a necessary short-term solution to address the shortage.
Addressing New Zealand’s construction labour shortage requires collaboration between the industry and the government. There is growing pressure on the government to ease immigration restrictions, allowing more foreign workers to enter the country and fill critical roles in construction.
Streamlining visa processes and providing more opportunities for skilled workers abroad would alleviate some of the strain on the domestic labour market.
For construction firms, investing in training and apprenticeship programmes is essential. To do this, construction companies can partner with local educational institutions to create tailored courses that align with industry needs.
Additionally, firms should actively recruit young people through outreach programmes in schools and community centres, promoting the benefits of a career in construction.
Another solution is to implement technology in construction. Firms should explore modular building techniques and invest in digital tools that enhance efficiency. Training existing staff to use these technologies will also be necessary to ensure smooth integration and maximise benefits.
Construction companies can collaborate to share resources and best practices, creating a unified approach to tackling the labour shortage. Regular industry forums can be established to facilitate dialogue between builders, policymakers, and educational institutions, ensuring everyone is aligned on the challenges and potential solutions.
Larger firms are better positioned to attract skilled workers by offering higher wages, while smaller contractors may struggle to compete and face fewer opportunities in the market.
If labour shortages persist, there will be more extended timelines, and rising costs may lead developers to delay or even cancel future projects, posing significant challenges for local sectors reliant on tourism. For example, regions like Queenstown could experience a downturn in tourism revenue, as a lack of available hotels to accommodate visitors would create major economic difficulties.
New Zealand’s construction sector is undeniably facing significant labour shortages that are driving up hotel construction costs and causing delays. However, this challenge presents an opportunity for builders to innovate and adapt.
Local firms can bridge the gap by hiring international talent, utilising modular building techniques to streamline processes, and investing in apprenticeship programmes to cultivate a skilled workforce.
Kiwi builders can mitigate the impacts of these shortages and strengthen the sector for the future if we implement these solutions and see more collaboration between industry leaders and policymakers. It’s time to act decisively and transform challenges into opportunities, ensuring that Aotearoa’s construction industry remains resilient and robust.
