From hero to zero – what's the future for tourism?

Friday, 3 April 2020

Having a flightless bird as our national symbol is proving particularly appropriate in a global pandemic.

New Zealanders made more than 3 million overseas trips last year, but Covid-19 has abruptly clipped our wings, and grounded international tourism for the foreseeable future.

Having now infected more than 1 million people and killed 53,000-plus worldwide, the virus forced New Zealand to close its borders last month, a previously unthinkable move for a nation with tourism as its top export earner.

The 3.9 million overseas visitors who came here last year spent the equivalent of $47 million a day with domestic travel making up the remaining 60 per cent of the $41 billion in total annual tourism spending.

Now travel within New Zealand is limited to essential personnel and fleeing foreign tourists catching repatriation flights home, and the swiftness and viciousness of the economic blow is sinking in.

**READ MORE:

* [SkyCity announces restructure, 200 jobs to go

* Coronavirus: Potentially more than 100,000 tourists still here](https://www.stuff.co.nz/national/health/coronavirus/120514782/potentially-more-than-100000-tourists-still-here)

* Help us within 48 hours or there will be 'carnage' warn tourism leaders

* Coronavirus: Hundreds of tourism jobs lost and fears more at risk**

It began with a border ban on Chinese arrivals in early February and six weeks later expanded to cover the rest of the world.

Te Puia chief executive Tim Cossar is turning his mind to how the cultural and geothermal attraction might rejig products previously aimed at overseas visitors.

Pre-virus, growth in overseas arrivals was already slowing but the tourism industry is suffering whiplash from the sudden turning off of the visitor tap.

New Zealanders who complained bitterly about 'overtourism' – feral freedom campers, bad foreign drivers, noisy scenic helicopter flights, and over-populated holiday hot spots – are getting a taste of 'undertourism.'

Job losses, lower accommodation prices, higher airfares, shorter queues, fewer attractions and hospitality outlets and package tours of godzone for Kiwis may all be part of the new normal.

Instead of nipping across the Tasman for a spot of shopping in Sydney or a blast around the Gold Coast theme parks, Jucy chief executive Tim Alpe is hoping people will hire a campervan for a tootle around the South Island.

Roys Peak near Wanaka was notorious for the long queues of tourists waiting to be photographed at the scenic lookout, but that's no longer the case.

'There used to be a saying, 'don't leave home until you've seen the country', well now you can't leave home, so go out and see it.'

Economist Shamubeel Eaqub says we need to avoid being overly negative.

According to Stats NZ, New Zealanders shelled out $6.5b on overseas holidays and business travel last year ad Eaqub says at least some of that will instead land locally.

Once we get sufficiently on top of the Covid-19 spread to relax lockdown restrictions, those suffering severe cabin fever after weeks of living and working from home may want to spend money saved by lack of access to shops on a break away.

'But we'll also be going into a period when people will be losing jobs and we're already hearing about widespread job losses across many districts,' Eaqub says

Jeroen Jongejans from Dive Tutukaka says businesses still have to cover costs like maintenance, which for his five boats comes to 'a couple of hundred grand' a year.

Tourism hibernation

Tourism Industry Aotearoa (TIA) chief executive Chris Roberts represents about 1500 operators and talks of them going into 'hibernation' until things pick up.

He admits that some may never 'wake' from that winter sleep and it's possible that half the tourism businesses operating back in January will no longer exist.

'The severity of this means there will be some high-profile casualties,' Roberts says.

Mayor Jim Boult does not expect borders to open any time soon, and instead of a planned holiday to Italy he is looking at a break in Northland or the Coromandel. (File photo)

He won't name names but it's clear TIA's efforts to get the wage subsidy extended to larger businesses have not been enough to prevent widespread job losses.

Operators and regions heavily dependent on overseas visitors have been hardest hit.

Hobbiton, which last year applied to increase visitors numbers to a maximum of 650,000 a year, has closed its doors and made more than 200 staff redundant, with a similar number going from SkyCity.

David Cumming was among the last people to visit the Hobbiton Movie Set before its closure, another casualty of the Covid-19 pandemic.

In Rotorua, Te Puia's Maori cultural centre and geothermal attractions are also shuttered and of the 160 staff, only those tending birds in the kiwi house are allowed on site.

Chief executive Tim Cossar made the gut-wrenching decision to lay off most of his workers because 93 per cent of his business had disappeared with the loss of overseas visitors, and he cannot see that changing for the rest of the year.

'If you don't have a customer base, all the wage subsidies in the world aren't going to get you very far.'

Bad debt is another looming problem with equally stressed travel wholesalers unable to pay their bills, and a further complication is Te Puia's ownership.

Jucy is among tourism businesses stitching together package deals involving its pod hotels and campervans to get New Zealanders to travel the country when lockdown ends.

A Crown-owned entity, it was on the cusp of becoming iwi-owned as part of a Treaty of Waitangi settlement, but Cossar says legislation to complete the process was withdrawn two weeks ago due to the virus crisis.

Tourism spending figures for January from the Ministry of Business, Innovation and Employment highlight large regional variations when it comes to reliance on overseas visitors.

In areas such as Gore, Masterton and Kaipara, between 80 and 90 per cent of spending was domestic, compared to 38 per cent for Queenstown, 40 per cent for the Mackenzie District, 49 per cent for Auckland.

Queenstown Mayor Jim Boult does not expect overseas visitors back in his patch in any numbers until the summer of 2021, and is realistic about New Zealanders helping to fill the gap.

'It would be naive to think that there's going to be a queue of people busting their pants to come here immediately after the lockdown.

In Rotorua it was estimated more than a fifth of the workforce was employed in tourism-related jobs.

'It will be a long time before people get their heads around travelling, most New Zealanders will take a hit to the hip pocket and that will affect their travel patterns.'

However, he takes heart from the fact that of the 3.3 million visitors to Queenstown last year, close to half of them were Kiwis, and he is confident the resort can eventually expand that domestic market.

He expects Queenstown to retain its adventure tourism reputation for sky diving and bungy jumping, but says a new performing and visual arts centre add a more cultural focus to the mix.

The Queenstown Lakes District Council is also accelerating efforts to widen its economic base by attracting businesses in the film, education and high-tech sectors.

Boult hints that some big infrastructure projects are in the offing to make up for the thousands of jobs going from tourism and hospitality as restaurants and hotels shut their doors.

'If you can't work in a kitchen, maybe you can swing a hammer. If you can't drive a boat, maybe you can drive a truck.'

Winners and losers

Only three international airlines, including Air New Zealand, are still offering scheduled services out of the country.

Roberts says businesses that traditionally cut right back or close down completely in the off-season are better prepared for the absence of customers.

'The irony is the seasonality we have battled for so long is a form of protection for them because they are used to not having any business over winter.'

For the backpacker sector, Roberts hopes that instead of an OE, young people could plump for an LE (local experience), roaming New Zealand and picking up seasonal work usually done by 50,000 to 60,000 people here on working holiday visas.

He fears for the luxury end of the market because the pool of New Zealanders able to pay for their high-end products is limited.

Ski slopes may be a lot quieter this season.

That said, he believes well-heeled travellers will be the first to return when borders open.

'We know there have been inquiries about getting private jets into New Zealand even now because people see it as a safe place to be.'

The cruise industry also faces an uncertain future thanks to a number of vessels hosting outbreaks of coronavirus, forcing unlucky passengers to quarantine in their cabins, sometimes for weeks on end.

New Zealand Cruise Association chief executive Kevin O'Sullivan is remarkably chipper given that cruise ship Ruby Princess has been named as the source of a cluster of coronavirus cases resulting from its voyage around the country.

He says an estimated 112,000 New Zealanders took cruises worldwide last year, and spending by the 322,000 passengers who visited our ports hit $370m.

Some hospitality businesses are simply closing up shop for the duration of the level 4 coronavirus lockdown.

If restrictions on vessels coming here are lifted in time, he sees no reason why up to 1200 port visits scheduled for the coming summer season should not go ahead.

Rising airfares on the horizon

The massive reduction in overseas and domestic travel has airlines reeling and the impact will be felt for years to come.

There are now 13 cases of coronavirus linked to the Ruby Princess cruise ship, seen here in Napier, making it one of ten 'clusters' nationwide.

Just three international airlines are offering scheduled services out of New Zealand, down from 30 in January.

In terms of capacity, the 738,228 airline seats (not passengers) into New Zealand last April has fallen to 41,458 this month.

Air New Zealand has grounded about half its 114 aircraft, dropped 95 per cent of its international capacity, drastically reduced domestic flights, and is preparing to shed about a third of is 12,500-strong workforce.

Chief executive Greg Foran has not minced words on what the future looks like for the proud sign of the koru and the airline's revenue is expected to fall from about $5.8b to less than $500m.

'We're planning to be a domestic airline with limited international services to keep supply lines open for the foreseeable future.'

Eaqub says many Kiwis have failed to appreciate that all those inbound seats also delivered more affordable outbound travel, which is probably off the cards for quite some time.

A family stroll down Arrowtown's Buckingham St, which is usually busy with tourists.

'One of the benefits of tourism is that it gives us access to markets and places that we wouldn't otherwise get because a country of 4 million people doesn't need that many airline connections.'

Once airlines pull out, airports will have to work hard to get them back, Robert says, and it's likely a significant number of airlines will collapse.

'The bargain airfares won't be around, so it will be more expensive to fly offshore.'

Stay-cations on the cards

Thousands of rental cars are parked up in Frankton, Queenstown.

Until a vaccine for Covid-19 is developed, possibly by next year, Roberts says there may not be any significant international travel.

Selective opening up of borders may occur as different countries get the virus under control.

Ideally, that would include trans-Tasman activity, with places like China, Singapore and Taiwan added if health advice said that could be done safely.

But in the interim, people will be holidaying at home and the tourism industry has to come to grips with a market that is 100 per cent pure locals.

Roberts says domestic spending tends to be on things like petrol, groceries and a beer at the pub, with only a little on activities, and New Zealanders often complain about the cost of attractions.

'Sky diving, jet boating and bungy jumping are essentially priced for an international market and businesses are going to have to look at whether they need to adjust their pricing for a domestic visitor.'

On the other hand Roberts says New Zealanders baulk at paying the $75 for entry to a world-class attraction like Hobbiton, but they will happily pay that and more for attractions overseas.

Eaqub says there is some psychology attached to that.

'We tend to be more free with our money when we go to an overseas location and it's a 'proper' holiday.

But he believes price cuts are inevitable here simply on the basis of supply and demand.

'I don't want to pay full price in the middle of a recession, share the pain.'

Work is already being done on pulling together packages for accommodation, transport and attractions.

Roberts says it's important regions work together, rather than compete, with Tourism New Zealand expected to lend its expertise to domestic promotions while its international work is on hold.

Jucy has 2500 rental campervans and cars in New Zealand and has just shut its factory making campers for the local, Australian and US markets in preparation for the big slowdown.

It also has two cruise boats on Milford Sound and Snooze pod hotels in Christchurch, Queenstown and Auckland.

Alpe says package deals for road trips to make travel more affordable are a great opportunity for different businesses to collaborate and and he is already talking to tourism operators in Queenstown.

'We want to see restaurants and cafes, tourism experiences and hotels doing well and getting back on track.

'It's a crap situation, so how do we make the best of it and get Kiwis travelling so they don't go to the theme parks in Australia, they go to Milford Sound.'

* Comments have been closed.