Coronavirus: NZ tourism reels from border closure and Chinese visitor drought

Friday, 14 February 2020

Coronavirus has turned off New Zealand's second largest tourism market virtually overnight.

New Zealand may be coronavirus-free but the tourism industry is feeling more than a little sick.

This time of year paddocks at Shamarra Alpacas on Banks Peninsular are usually dotted with happy smiling Chinese tourists, petting and posing with the undeniably photogenic livestock, before spending up large in the gift shop.

This February, those Chinese visitors are largely absent, bar the few who arrived before New Zealand closed its borders to visitors from mainland China to prevent spread of the virus.

NZ's tourism industry is feeling the effects of coronavirus.

The farm is looking down the barrel of a 40 per cent drop in customers, a pattern being repeated in tourism businesses all over the county.

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Officially dubbed Covid-19 by the World Health Organisation (anxious to avoid monikers like the Wu Flu), the virus has killed more than 1500 and sickened 60,000-plus, sparking a global health emergency.

Our Government followed other countries in imposing travel restrictions which inconveniently fell around Chinese New Year, peak time for our second-largest international tourism market.

Pre-border closures Queenstown attracted may Chinese visitors. Uncertainty about the length of the travel restrictions is worrying the tourism sector.

While supporting the move on public health grounds, the industry is deeply worried about the many 'unknowns' around this unprecedented measure.

How long will the travel ban remain in place, can they hang onto staff in the meantime, will fear of infection taint long-haul travel, and how long will any economic recovery take?

Coronavirus has killed more than 1500 people.

Tourism was already slowing as a result of factors such as Brexit, the China US trade war, and the Australian bush fires.

The latter left us with smoke-filled skies, but also meant some international tourists planning a trip to both countries were put off by scary TV images of raging fire storms and they dumped both destinations.

Shamarra Alpacas co-owner Anya Wallkington is relieved her customer mix of different nationalities helps to compensate for the drop in Chinese, but she is still carefully watching coronavirus developments.

'It all depends on how long it goes on for, if it drags through into next spring, it will be significant for us.'

Shamarra Alpacas is not getting to welcome its usal contingent of Chinese tourists and owner Anya Wallkington says they are hoping border restrictions are lifted in time to see the Chinese return during their school holidays later in the year.

Ngāi Tahu Tourism's 14 businesses host a millon visitors annually and about a quarter of them are Chinese, which explains why chief executive Quinton Hall is not a happy man right now.

'It's really tough.'

Rotorua operations Agrodome and Rainbow Springs, which traditionally attract a lot of Chinese group tours, are being hammered as are Dart River Adventures jet boat trips down south.

Then there's the bad weather.

Over the past year it has repeatedly forced trip cancellations and caused at least a dozen significant road closures on the West Coast, costing the region something like $140m in potential earnings.

As a result of recent storm damage in Fiordland, Milford Sound remains cut off for all but those tourists who can afford to fly in, and guided walks on the Hollyford Track have been halted for the forseeable future.

Ngāi Tahu Tourism employs up to 550 people over peak season and Hall is desperately trying to avoid layoffs.

Ngāi Tahu Tourism chief executive Quinton Hall says storm damage on the West Coast and in Fiordland has combined with coronavirus to make it a difficult summer.

'In some places we may not be able to help it, but we will do the best we can to keep people as long as we can, because the market will bounce back and we want to be in the best shape we can when it does.'

In peak season, 3000 to 4000 people a day visit Milford Sound and Tourism Export Council chief executive Lynda Keene says that to have an iconic destination like that out of action is really compounding the loss of Chinese trade, and we need to do a better of job of making key routes more weather-resistant.

Bus convoys over a temporary fix to the Milford road are slated to begin at the end of this week, 'but there's still a huge rental car and private vehicle market that won't be able to travel to Milford'.

Keene says some businesses she surveyed were recording more than 6000 cancellations.

Some of those were from countries such as Singapore, Korea, and Japan were attributed to lack of access to Milford, rather than coronavirus.

About 50,000 Chinese visitors were expected to celebrate Chinese New Year in New Zealand, but thanks to coronavirus, most did not make it.

Her take is that smaller, newer operators without cash reserves under their belts are going to struggle, especially since business interruption insurance is unlikely to apply to virus losses.

Ross Oxnam owns souvenir shops in Nelson and Christchurch and he says that, pre-virus, sales were already down 15 per cent on last year.

For 2020 the drop could be double that, and a lot more for larger outlets relying heavily on Chinese tours for the bulk of their income.

'Of real concern is our ongoing relationship with China over the next 12 months due to lasting sentiment over the closing of our borders.'

Why it matters

International visitor arrivals hit 3.9 million last year and rapid growth stoked anti-tourism sentiment in communities where infrastructure could not cope, but there is no denying the sector's economic importance.

In the 12 months to the end of March 2019, tourism directly accounted for 5.8 per cent of gross domestic product and international visitors paid $1.8b in GST.

The industry directly employed 230,000 people and indirectly employed nearly a further 164,000 which is about 14 per cent of the total work force.

International tourism's $17.2b earnings made up just over 20 per cent of exports, compared with dairy products which earned $15.6b (18.5 per cent of exports).

Kiwi Originals owner Ross Oxnam says his two souvenir shops are also feeling the loss of Chinese visitors, despite a wide customer base from Europe and Australia.

Chinese visitor numbers were down about 10 per cent last year but they still spent $1.6b which is about 5.2 per cent of total tourism revenue industry (domestic and international).

On Wednesday, the Reserve Bank said the economic implications of the virus outbreak were very uncertain, and while it was likely to reduce growth, current projections assumed any effects on New Zealand would be shortlived, but that could change if the outbreak persisted.

Rescue plan

Tourism New Zealand (TNZ) chief executive Stephen England-Hall has estimated the drop in Chinese visitors could cost the industry $500m over six months.

'Everyone is feeling it, no question there.

For the year ended November, Chinese visitors spent $1.6 billion (13.5 per cent of all international visitor spending).

There are signs custom from other key markets may be affected too.

'I've heard there are a couple of conferences and group bookings that have been cancelled in the coming months because people just don't want to travel, or companies have made the decision that they won't want to put all their staff in one room together just at the moment.'

England-Hall said that sort of travel anxiety has emerged after past crises, and TNZ will work hard to counter it.

In the short term it will run a campaign to get more Australians over here for autumn breaks and for winter skiing, running up against an internal Australian campaign to get its residents to holiday at home to compensate for bushfire losses.

Longer term, TNZ will target Japan and the United States for next summer, and England-Hall says they are evaluating the potential of a post-Brexit 'bounce' as consumer and business confidence grows in Britain.

TNZ will use money earmarked for promotions in China and is also seeking contributions from airports, airlines, regional tourism authorities and large tourism companies.

Tourism Industry Aotearoa chief executive Chris Roberts believes there is a strong argument for Government to give TNZ a top up so its China budget remains intact, ready to stimulate bookings there once the virus threat is over.

And when the Chinese do come back, Roberts says we should be careful to welcome them with open arms.

'There are only very isolated cases of Chinese visitors who were already here when this issue broke who have encountered some inappropriate comments, nothing large scale, but as an industry we won't tolerate that sort of behaviour.'

100 per cent pure and virus-free

Tourism has always been vulnerable to outside influences – think disease outbreaks like Sars and bird flu, flight disruptions cause by ash-spewing volcanos in Indonesia and Iceland, the Gulf War, financial crises, or the 9/11 terror attacks in the US.

Tourism consultant Stephen Hamilton says this 'shock' feels different.

He thinks the recovery time will take longer because of the border closure and because it involves such a major market.

For the first time in some years we may actually see total visitor numbers drop in 2020.

'I can't see how we are going to be able to stimulate enough growth in other markets to replicate the decline from China.

On the other hand, our current lack of any virus cases may help.

'We are 100 per cent virus-free as well as 100 per cent pure.

'Even if we do get a few cases here, the mortality rate seems to be low and presumably we will get away without any deaths … it may be that in terms of relative positioning, New Zealand comes out of this looking like a more desirable destination.'

Kate Deng runs a small travel agency for independent Asian travellers and she says that some Chinese visitors already here, including her own mother, have extended their stays to avoid possible exposure to the virus back home, or en route.

'They think New Zealand is a safe place to stay, they can work online and study online.'

With Chinese airport travel hubs out of action, and passengers avoiding Hong Kong's messy political situation, there is a lot of reliance on Singapore as a hub for European travellers coming here.

If Singapore the infection rate increased significantly, New Zealand could suffer too, Robert says.

'It's not a reflection on the situation here, it's what they [passengers] might encounter on the way here.'

Lessons from coronavirus

The sudden loss of Chinese tourists has inevitably provoked criticism of TNZ for putting too many eggs in one basket.

England-Hall concedes it certainly underlines the need for a 'diverse portfolio' which he says is a work in progress.

'If you think that 10 years ago, 60 per cent of visitors were from Australia, now we're in a place where it's closer to 40 per cent, China is 15 per cent and the US is 13 per cent … we're on the right path.'

There is a lot of interest in tapping into the Indian market, but that's difficult without direct flights, and there is nothing on the horizon, England-Hall says.

All the more reason to hope that the ills that have snatched such a chunk of our Chinese visitors are quickly brought under control.

'The sooner we can get back to trade and visitation in both directions, the better.'

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