If we want to be a world-class tourist destination, we need to plan for it

Wednesday, 13 August 2025

Kaikōura’s Sudima Hotel. Getting new hotels built and planned at strategic points around the country should be a part of the country’s wider infrastructure plans, argues James Doolan.

James Doolan is strategic director at Hotel Council Aotearoa and principal of Fantail Advisory.

OPINION: Tourism is one of New Zealand’s most important industries. It contributes 7.5% of GDP, supports 10.7% of employment, and accounts for 17.2% of exports. In the five years before Covid, tourism averaged 20.3% of our exports – consistently outpacing even the dairy sector. Yet tourism infrastructure remains an afterthought in national planning.

That needs to change.

The Infrastructure Commission’s Draft National Infrastructure Plan is a welcome step forward, but it misses a critical point: New Zealand’s economy needs tourism, and tourism needs infrastructure. If we aspire to be a world-class destination, we need great hotels, airports, ground transport and public amenities. “The market” doesn’t always provide those things when and where we want them.

Hotels might be privately owned, but they are undoubtedly infrastructure. They are as essential to the visitor journey as airlines, airports and ground transport. Tourists don’t spend money in local shops or attractions until they’ve travelled this network of capital-intensive “tourism-enabling infrastructure.” Unimproved, inaccessible landscapes are not coherent tourism destinations.

Chateau Tongariro at Whakapapa on the slopes of Mt Ruapehu is a now-faded legacy of the old days of the state-run Tourist Hotel Corporation.

New Zealand once understood this. We built and operated hotels through the state-owned Tourist Hotel Corporation to unlock our icon sites. This is a typical early-stage strategy for countries wanting more free-spending international visitors.

We still have public part-ownership of our national airline and selected airports and convention centres. In recent decades, we’ve rightly stepped back from direct investment in tourism businesses. What we haven’t done is adopt best practice around attracting and supporting private investment to take up the slack. The result? Ongoing infrastructure shortfalls and wild swings between boom and bust.

To meet the Government’s goal of doubling tourism exports by 2034, New Zealand could need 15,000 to 24,000 new hotel rooms. That’s 150 to 240 new 100-room hotels, or around $6 billion in new equity investment. And that’s just accommodation. We’ll also need more aviation capacity, EV charging stations, amenities and public transport.

But here’s the catch: hotel returns vary by region. Queenstown is booming but squeezed in peak periods. Meanwhile, Christchurch, Taupō, Palmerston North and other regional locations are trying to attract new hotel investment, even though room rates are typically much lower than those achieved in Queenstown.

Cruise ship passengers on the move in Lyttelton.

This is a classic tourism problem globally. Returns are best where demand is already proven, but the best national outcome for New Zealand could be supporting new “tourism clusters” to spread benefits and relieve pressure on hot spots.

New Zealand’s regional destinations offer real potential, which is why we need smart strategies to de-risk tourism infrastructure projects and attract capital to where it’s most needed. Investment might come from private sources, but the long-term benefits are public.

Hotel Council Aotearoa supports creating a dedicated tourism development agency – like Ireland’s Fáilte Ireland– to coordinate infrastructure planning, attract investment and ensure growth is coherent and regionally balanced. Failing that, tourism expertise must be embedded within existing institutions like the Infrastructure Commission.

Tourism New Zealand is a world-class marketing agency, but it doesn’t claim supply-side expertise. A dedicated tourism development agency would tackle long-term infrastructure challenges in lockstep with airlines, airports and hotels.

Tourism is not just a collection of private businesses. It’s a critical export sector shaped by policy and public infrastructure. We cannot afford to keep bouncing between tourism boom and bust. Tourism should be a standalone sector in the Infrastructure Plan, with recommendations driven by expert engagement and global best practice.

Tourism is a cornerstone of our economic future. Let’s start treating it that way.