Wellington bracing for financial hit from cruise ship visit drop

Monday, 29 July 2024

Wellington is being warned to brace for a “noticeable” economic hit as global and local factors combine to take a $150 million chunk out of New Zealand’s half-billion-dollar annual cruise industry.

Locally, the expected drop is being blamed on costs around New Zealand regulations and reports New Zealand is among of the most-expensive countries for cruises to visit.

Globally, it is being blamed on an array of factors including cruise companies not wanting to take ships near conflict zones such as the Red Sea and waters near Ukraine.

Cruise Association chief executive Jacqui Lloyd said what was a $547m injection into the economy in the 2019-2020 season the last time Stats NZ did figures, was expected to take a $150m hit this season with a 15% drop in port calls and 22% drop in passenger numbers.

It was a three-pronged hit with geopolitical strife globally, including the Red Sea and Ukraine, meaning cruise ships were tending to stay in the Caribbean and western-Mediterranean. There was also more global competition to get cruises.

But cruise companies reported New Zealand was one of the most-expensive places to visit, she said.

Once regulation, port, and entry fees were paid, a cruise taking 3000 people through eight New Zealand ports and Fiordland cost cruise companies $620,000 in fees and levies alone.

Per-passenger Customs levies were expected to increase by 88% by this summer, from about $12 to $20 per-passenger, she said.

And we were locked in for a relatively sparse few years as most companies had already locked in itineraries for the coming few years.

WellingtonNZ tourism and visitor economy manager Jo Heaton said this season’s drop in cruise numbers would “undoubtedly” have an economic impact but the scale was hard to quantify.

The main driver of the reduction was the increased cost of getting ships to the Southern Hemisphere summer, she said.

“Frankly yes, the impact of lower passengers is likely to have a noticeable impact – the passengers add vibrancy to the city and retail and hospitality may notice it more than tourism businesses that have existing contracts to provide shore tours.”

The coming season would see smaller ships in port, which could be a benefit as they were often more exclusive and carried “higher value” passengers.

Wellington harbourmaster Grant Nalder recently told the Greater Wellington Regional Council – the majority owner of the region’s port – that the city was expecting a drop in cruise numbers this season, reflecting a nationwide trend.

Ports in Lyttelton, Auckland and Tauranga also confirmed an expected drop, while Napier expected to stay level with last season.

An statement from Customs said its proposed increase to border processing levies would mean an extra $7.82 cruise per passenger. The money was needed to improve management of risks at the maritime border through digitising traveller declarations and more maritime security features.

“Along with those two new costs, there is also the general level of inflation driving up costs and wages, and also there will be a small deficit built up in the memorandum account that will need to be recovered,” the statement said.

Biosecurity NZ implementation and approvals manager Paul Hallett said the country could not compromise on biosecurity.

“We know that almost 90% of the exotic marine species already in New Zealand likely arrived here as marine growth on the submerged surfaces of international vessels.

“These sorts of pests can adversely impact New Zealand's environment, unique marine ecosystems, aquaculture industry, and economy.”

Biosecurity levies for passengers were not expected to increase, Hallett said.