Tourism growth exceeds industry targets, on track to reach 2025 goal

The value of the visitor economy grew three times faster than volume growth in 2015 with spending up 31%.

The Tourism Industry Association has today reported on progress on its Tourism 2025 growth framework launched two years ago, with tourism spending estimated to have reached $32.5 billion in the year ended March 31.

In the two years since the growth framework was unveiled, the industry's performance has exceeded all forecasts, with a 20.1% increase in international arrivals. Domestic tourism climbed 9.2% in the same two-year period. However, there has been little progress on spreading visitors outside the tourism hotspots and shifting arrivals outside the summer peak.

"We are well ahead of the growth rate needed to reach our $41 billion goal by 2025," said TIA chief executive Chris Roberts, speaking at Trenz, the country's largest international trade tourism event.

Tourism New Zealand chief executive Kevin Bowler says while it took 13 years to grow from two to three million visitors, the growth from three to four million will be more rapid and is likely within the next four or five years.

He's also happy New Zealand is beating its closest neighbours with total international arrivals up only 8.7%  in Australia in the past year compared with 10.4% for New Zealand, which Mr Bowler puts down to clever marketing, particularly in the digital area.

The value of the visitor economy grew three times faster than volume growth in 2015 with spending up 31%, compared to a 9.6% increase in arrivals. And growth is up across all of the key markets, led by a 32.2% gain in Chinese holiday arrivals.

Mr Roberts said two things were needed to capitalise on future growth – boosting visitors during the shoulder and off-peak season and channelling more into regional areas, which both help with capacity constraints at key tourism destinations during the peak season.

Growth in the main destinations has been higher than for secondary destinations in the past two years.

Tourism NZ has in the past two years spent 80% of its annual $80 million marketing budget on promoting travel off-peak and is now moving that to 100% as building on New Zealand's shoulder seasons takes top priority.

"It's a hard nut to crack. The regions want these visitors but the infrastructure has to be there. We can't shift big tour groups to places where there are no hotels for them," Mr Bowler said. "It's a Catch 22."

Smoothing the peaks in visitor arrivals will make the industry more attractive from an employment and investor point of view and add value to the sector, he said.

The industry has already achieved 2%  faster growth in spring 2015 at 17% than in the summer which achieved 15% growth and Bowler is optimistic autumn 2016 will also surpass last summer's growth.

Tourism NZ's marketing spending is focusing on visitors outside of the peak season, long-stay visitors such as backpackers who go out more into the regions, special interest activities such as cycling, golf, skiing and hiking which attract a higher spend, business events, and high net worth travellers in the premium sector.

Tourism 2025 - Two Years On identifies about 30 priorities for the industry to work on in the next two years, in particular, growing capacity and infrastructure.

New Zealand's visitor density is still low by international standards – six international visitors to every 100 New Zealand residents in peak and that falls to just two per 100 in the off-peak.

Mr Roberts said there are now capacity constraints, particularly with accommodation in key destinations and more work needs to be done at local government level on key infrastructure such as roading and sewage to cope with an influx of more tourists. Investment in many areas of tourism is lagging behind demand so the country needs to speed up its planning, decision-making and investment cycles, he said.

Christchurch Airport has announced a 200% increase in accommodation at the airport by December 2017, with recent redevelopment at the Sudima Hotel, a $10 million investment in a Jucy Snooze hostel due to open in October, and an $80 million Novotel hotel is due to open at the end of the year. The airport said the accommodation investment was in direct response to airline and passenger inquiries for short-term airport accommodation.

Christopher Luxon, chief executive of Air New Zealand which brings 40% of all international visitors to New Zealand, said industry collaboration was key to further growth.

"Tourism is the ultimate team sport and we're playing it really well but we have to collaborate and have clarity on our goals," he said.