GETTING THE BALANCE RIGHT

Auckland is growing fast, and as tourism flourishes so do the aspirations of its business community

2016-05-01 - writes Jeremy Tredinnick

Afair wind is blowing across the Hauraki Gulf towards the city of Auckland. In days long past that would have been good news for its population, who would have eagerly gathered at the waterfront Ferry Building as tall ships sailed in from distant lands to this remote corner of the British Empire.

Today, it fares well as a metaphor for the city’s fast-paced growth, booming economy and increasingly positive reputation as one of the world’s best cities to live and work in. The age of the internet has brought global connectivity, while the rapid increase of airlines willing and able to fly to this Antipodean archipelago has also served to reduce its reputation as a beautiful but distant backwater. Foreign visitor arrivals at the end of February 2016 were 10.1 per cent up year-on-year at 3.17 million, with holiday arrivals seeing 14.3 per cent growth.

Of course the tourism industry is a major segment of the country’s economy – the natural beauty and variety of New Zealand’s landscapes are renowned worldwide – but other business opportunities are plentiful, and nowhere more so than in Auckland, the country’s commercial capital and largest city (Wellington is the political capital).

“Auckland represents 35 per cent of national GDP, so we are the city that’s driving the performance of the national economy,” says Patrick McVeigh, general manager business, innovation and skills, Auckland Tourism, Events and Economic Development (ATEED).

It also happens to be a picturesque city, built on hilly ground beside a huge harbour dotted with gorgeous subtropical islands, bays and peninsulas boasting enviably balmy residential areas. Not for nothing is it known as the “City of Sails”, for it boasts the highest per capita boat-owning population in the world, dominated as it is by water – a 30-minute drive takes you from the Hauraki Gulf and Pacific Ocean in the east to the black volcanic sand beaches of the west coast, that face the Tasman Strait and Australia beyond. A stroll down Queen Street towards the waterfront takes you past Aotea Centre on the left with its open square, events venue and theatre, then on the right the revitalised historic Britomart district, whose lanes and squares have become a fresh, upbeat shopping and lifestyle dining hub. But hit the waterfront, where massive cruise liners park next to numerous bustling ferry terminals, and you know you’ve reached the nexus of the city.

Auckland was ranked third in the 2012, 2013 and 2015 Mercer “Quality of Living” surveys, and continues to appeal to large numbers of migrants, mainly from Australia and Asia, for whom its benign climate, clean air and easygoing lifestyle are major draws. “The current government’s policies have been very progressive and have worked well for the country,” says Franz Mascarenhas, managing director of the Langham Auckland hotel. “A steady inflow of skilled migrants and a booming tourist industry have ensured a strong and stable economy.”

AN INTEGRATED BUSINESS PLAN

Auckland’s vision is to become an innovation hub in the Asia-Pacific region, and this initiative is being developed by ATEED, in conjunction with Auckland Council, tourism partners including Tourism New Zealand (TNZ), as well as a Business Events Plan – developed by the Auckland Convention Bureau (ACB) – which has set a target of growing the business events sector from NZ$236 million in 2013 to NZ$430 million by 2023. Alignment between all organisations is vital when you are a relatively small but ambitious city competing on the global stage.

“Globalisation is an ongoing process, and Auckland is one of a wave of new world cities that have emerging areas of economic specialisation, a high quality of life, plus a growing and ethnically diverse population, cities like Brisbane, Vancouver, Barcelona – they are the ones that we benchmark ourselves against,” says McVeigh. “We do very well in lack of corruption, ease and low comparative costs of setting up and doing business, excellent e-finance systems, quality of life, etc. The digital revolution has been a blessing

for New Zealand because historically its remoteness was a major obstacle, but that is no longer such a problem.”

The Global Innovation Index 2013 ranked New Zealand 17th out of 142 countries and, significantly, third in Southeast Asia and Oceania behind Hong Kong and Singapore (seventh and eighth overall for innovation) – New Zealand’s exports in the tech sector have doubled in the last five years.

McVeigh continues: “Auckland has a very diverse economy, built on a really good economic base. There’s a strong property sector, we are New Zealand’s centre for business and financial services, and we have a buoyant construction and engineering sector, benefiting from significant investment in infrastructure programmes. The technology sector has been increasing very quickly, with a 26 per cent growth rate over the last five years.”

With annual GDP growth expected to be around 3 per cent, Brett O’Riley, CEO of ATEED, says, “innovation and entrepreneurship are key drivers of economic growth and critical to delivering a prosperous economy”.

TARGET MARKETS

Australia, China and the US are the main markets for New Zealand, in that order, and broadly that is true in both leisure and business sectors. International conference and group events are mostly from Australia, and the focus in the US and Asia is around incentive travel.

“Historically we were all about agriculture and primary produce, but increasingly that’s becoming more of the value-added industries,” says René de Monchy, director of trade, PR and major events, TNZ. “We focus on bidding for international events in sectors where New Zealand excels on the global stage, such as the marine industries, agribusiness,

health science, high-value foods, etc.”

“We are changing our focus – we will always support the destination, but it’s not just about the beaches now, it’s about your brains as well,” says Anna Hayward, manager of the ACB. “It’s about marrying local experts and offerings with the right target organisations. ”As part of this drive towards targeting specialised clients, the ACB has launched its own ambassador programme, called the Auckland Advocate Alliance, in which industry leaders are drawn from sectors such as health, education, food and beverage, marine, earth science and ITC. “They connect associations and organisations within their fields who don’t necessarily know what opportunities there are in Auckland,” says Hayward.

A major issue that is being addressed is the seasonality of Auckland’s tourism industry – visitor numbers taper off quickly after busy summers. “This has traditionally plagued Auckland,” says Mascarenhas. “You’re at capacity in summer (November to March), then you drop to the 70s in percentage occupancy during winter. This however has been on the upswing over the last few years. We have been focusing on the corporate traveller and the MICE market as these are year-round segments and can potentially provide extra momentum to the visitor economy during the low and shoulder months.”

One exciting market that is growing at a rate of knots is the cruise industry. “In the past 10-15 years it has really picked up; we had a ten-year strategy to try to grow the cruise market and now we’re really starting to see the benefits, ”Hayward says. “The number of cruise ships coming into Auckland now is fast approaching the levels Sydney has, ”adds Mascarenhas, “which is why Auckland Council is progressively looking at building a new cruise ship terminal.”

That is only one of a number of development programmes that Auckland Council has undertaken as part of its City Centre Master Plan and Waterfront Plan. Huge tracts of land along the waterfront have already undergone renovation, and

there’s much more to come throughout the city in the years ahead.

GROWTH SPURT

Auckland is not a big city, and generally everything is in close proximity in the downtown area – within a 15-minute walk or less. The CBD’s high-rise buildings follow a gentle slope down to the Ferry Wharf and Viaduct Harbour residential and commercial precinct – it’s a pleasant place to stroll, never overcrowded, multinational and inclusive.

Auckland’s CBD offers more than 6,000 rooms in two- to five-star accommodation, but this is set to increase dramatically. “There’s new investment in hotels coming in the next three years,” says Hayward. Current top-end properties include the Langham Auckland, Sofitel Auckland Viaduct Harbour, and the Hilton on Princes Wharf. According to Hayward: “There’s a Park Hyatt being built here, a Ritz-Carlton, and those are the brands that will strengthen our offering. ”Add a good sprinkling of upscale and mid-tier brands, such as Pullman, Mercure, Ramada and Ibis, and there is plenty of scope for business accommodation.

The city already has two large purposebuilt convention centres, and a number of hotels and venues that cater to large-scale conferencing. “The Langham Auckland is one of the leading MICE venues in New Zealand,” says Mascarenhas. “With 13 different venues including the opulent Great Room, we are the hotel of choice to numerous black tie awards including the New Zealand Cricket Awards and the New Zealander of the Year awards. It is still the largest pillarless ballroom of any hotel.”

A major player in Auckland is Skycity Entertainment Group, which owns the Skycity integrated complex of two hotels, a casino and convention centre slap bang in the middle of town. (Auckland’s landmark Sky Tower is also here – from which brave souls can dive for thrilling freefalls onto a platform just above the street far below.) Skycity has recently agreed to a partnership with the government on the construction of the brand-new New Zealand International Convention Centre (NZICC), which will have a capacity of 2,850 delegates in a main plenary style and will open in 2019.

Situated just across the road from the Skycity Convention Centre, the NZICC will be operated by Skycity. It will also have a new five-star hotel, though how that will be branded is as yet unknown. “The new convention centre is hugely exciting for us, because that will really lift us,”says Hayward. Mascarenhas, too, sees the NZICC as a bonus for Auckland: “With the investments we have made in our MICE facilities, I have no doubt we will hold our own against our competition. The increased interest in Auckland that the new convention centre will generate will have a positive spin-off for all of us.”Until now the largest conferences Auckland could host

were around the 2,000 delegate mark, but the new infrastructure will allow them to actively target bigger events.

Another significant area of development is Wynyard Quarter, which borders Viaduct Harbour on the waterfront. The latter was first developed in the 1990s for the America’s Cup, but a more recent sporting event was the catalyst for much more.“The legacy of the Rugby World Cup in 2011 has been amazing,”says Hayward.“It improved our infrastructure, a lot of precincts were developed, they built the walking bridge that connects the Wynyard and Viaduct harbour areas to the city… it helped Auckland turn a corner and become a real destination.”

“Wynyard Quarter has been ten years coming,”says ATEED’s McVeigh.“There’s 48,000 sqm of commercial space, half of which is designated as an innovation precinct (GridAKL), it’s got a number of apartments in a new residential offering, and a very high-quality urban fabric, with high green ratings on the buildings. And that’s all integrated with the existing leisure offering which was opened as part of the Rugby World Cup.”Walking around the Wynyard precinct, peeking into advanced eco-friendly buildings, where bright young things are engaged in a variety of startups in open-plan office spaces, it’s easy to see the enthusiasm and optimism that Auckland’s planners hope will result in visionary business leaders of the future.

Meanwhile, in order to keep up with all this new development, the transport sector must evolve as well. Auckland will grow by more than 700,000 people over the next 30 years, and to cater for this both road and rail projects are under way. The Waterview road project will create a figure eight around the city, increasing the speed of flow of traffic, but more important is the City Rail Link (CRL) underground rail line, a 5.5-year project costing NZ$2.5 billion (US$1.7 billion) that will be able to cater to up to 30,000 people per hour. Eventually it will link downtown Auckland with the airport.

“The City Momentum Index by Jones Lang Lasalle ranks Auckland 20 from 120 cities worldwide,”says McVeigh.“There is a momentum in Auckland that is quite compelling; we have the reputation as a great city to visit and for quality of life, but it’s building the other two quadrants of a city to invest in and do business in that is important now.”

FLYING HIGH

The optimism is palpable in the City of Sails, but all will be for nought if the air traffic in and out of the city cannot support the growth. Auckland International Airport handles more than 70 per cent of all arrivals into New Zealand, with 120 international flights arriving every day and 26 international airlines flying direct to Auckland from dozens of destinations around the world.

It is a relatively small, compact facility at present, however. There are of course plans for an“airport of the future”, in the words of its CEO Adrian Littlewood. The