Tourism coming off the boil as spectacular growth slows

Thursday, 31 January 2019

In December a Mood of the Nation survey found 47 per cent of Kiwis felt forecast growth of 5 million visitors by 2024 was too high, but there are signs that the rapid growth of the last few years is beginning to wane.

New Zealanders worried about being overrun with overseas visitors may be about to get what they wished for.

Air New Zealand's recent $100m profit downgrade reflects the experience of the wider tourism industry which is reporting slower growth, with slight drops in some areas, and softer forward bookings.

Destination Queenstown chief executive Graham Budd said this was inevitable given the spectacular growth rates in the previous six years or so, and anecdotally the political and economic risks affecting Britain and China were making themselves felt here this summer.

'I know this has been more dramatic for some businesses than others … without question our adventure youth market has probably been our most obvious area of decline.'

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'A couple of years ago we were sailing along with tail winds and every business was growing and growing and growing, and that is definitely now not the case.'

Tourism Industry Association (TIA) chief executive Chris Roberts said the market was entering a new phase.

Although North America was still strong, the rapid rise in South American visitors appeared to have peaked.

Skydive Auckland is getting plenty of punters prepared to pay $595 to leap out of a plane at 20,000 feet, but other adventure tourism operators are doing it tough this season.

Brexit could have an impact of British numbers, and Roberts said Chinese New Year visitation could be down as much as 10 per cent this year.

Korea, Japan and Germany - which had been very steadily growing in the last four to five years - were now fluctuating a lot more.

TIA has focussed on attracting higher spending international visitors, rather than increasing total numbers, and Chinese tourists have been at the forefront when it came to spend growth.

However, Infometrics chief forecaster Gareth Kiernan cautioned against becoming too reliant on that particular segment.

'It's probably a little optimistic to expect visitors from China to keep spending more when their economy is slowing.

'There's concern about economic growth and household spending even within China, so you're going to struggle to attract people in the first place, and when they do get here, there's no guarantee you'll be able to entice more money out of them.'

Despite China's expanding middle class reaching 400 million, companies such as Apple and Starbucks had reported more disappointing sales last year.

Growth in Chinese electricity generation - another indicator of economic activity - had slowed, and the 'trade ruckus' with the US was also a significant threat, Kiernan said.

'It was pretty clear when you looked at the growth in arrival numbers from China, versus the [total] outbound tourism numbers from China, we were running well ahead in terms of taking more than our fair share, which is great, but it could never continue forever.'

Kiernan said Australia, already our largest visitor market, was the real bright spot in terms of tourism potential because as their economy slowed, Australians saw New Zealand as a closer, cheaper overseas holiday option.

Budd also regards Australia as a source of salvation and he believes we should be encouraging repeat trans-Tasman trips.

'We shouldn't necessarily be aiming for long holidays, but getting them to come back time and again to experience different regions.'

Budd said New Zealand also needed to up its profile as an outdoor adventure destination in the face of stiff competition from the likes of South America and Eastern Europe.

'I'm concerned that New Zealand may have lost its world-leading position in that space.'

Ray Salter chairs Destination Great Lake Taupo and the Youth Hostel Association. He agreed that adventure activities such as bungy jumping and jet boating were finding it tougher, as were some commercial accommodation providers.

'It's a question of how we're presenting ourselves; are we still on every backpacker's bucket list?

'My suspicion is that with better communications, up and coming countries are marketing themselves more actively,' Salter said.