Profitability is lagging behind an increase in demand for the New Zealand tourism industry, according to the latest industry monitor.Led by the Ministry of Tourism, the monitor is based on an online survey of tourism businesses (undertaken by Covec).It sh
Profitability is lagging behind an increase in demand for the New Zealand tourism industry, according to the latest industry monitor.
Led by the Ministry of Tourism, the monitor is based on an online survey of tourism businesses (undertaken by Covec).
It showed demand increased over the past three months (October to December) by an average 2% compared to the same three months in 2008.
However, average profitability across small to large businesses increased by only 0.7%.
Overall, the industry was relatively optimistic, with opinions stabalising after a volatile year in 2009, results showed.
Industry demand was expected to increase by 2.1% in the next three months, while profitability was expected to increase by 2.2%.
The level of optimism was down slightly on December and November, with 48% of respondents expecting demand to improve in the next three months, down from 52% and 51% respectively.
Demand was the biggest factor limiting businesses’ ability to perform optimally for 71% of respondents, followed by competition/discounting (36%), weather conditions (23%) and capacity (18%).
Tourism Holdings chief executive Grant Webster said it was one of the key issues for the industry. “We need quite a bit of demand to come back before profitability comes back, but it will happen quite quickly once that demand returns.”
The company fell into a “in line with expectations” category for business performance in the last three months.
“It was in line with what we forecast to the market last year in our annual result.
“The outlook is still more positive today than it was six months ago – there’s no doubt about that. But it’s still quite a difficult time to say what will happen.”
He said THL would be able to provide a much better update next month, when it released its half year results.
