Cold start
Tourism boss says battered sector can come back stronger but ‘has to aim high’
The battered tourism industry will be changed forever but has the opportunity to come back stronger, a sector leader says.
Tourism New Zealand chief executive Stephen England-Hall says tourism businesses need to be prepared to serve the domestic market only for the “foreseeable future” as there was so much uncertainty over when borders would reopen to visitors.
“I think there’s opportunity for the sector to recalibrate demand and supply initially around domestic and then international and if you’re going to recalibrate you have to aim high.”
This meant the economic and environmental concerns caused by over-tourism of the past weren’t repeated.
“The sector needs to be more productive, more inclusive, has a lighter footprint and be environmentally more restorative and bring communities on the journey with them,” England-Hall said.
Tourists who would spend more and stay longer would be targeted.
The industry would be more sustainable and it would have a new base designed around Kiwis experiencing their own country. “Then some of those social licence issues can be addressed,” he said.
Tourism NZ is about to launch the second part of its “Do Something New New Zealand” campaign to encourage domestic tourism. He said the campaign launched in May had attracted more than two million digital views in this country — and overseas — and had driven bookings to hundreds of tourism businesses.
Partnerships with media to highlight regions had also been successful, he said.
The new campaign this week would encourage Kiwis to get to the skifields now largely empty of overseas tourists and indulge in other winter activities.
England-Hall said New Zealanders who normally took holidays overseas — where they spend an estimated $7 billion to $9b a year — were encouraged to spend that on domestic holidays.
Economists at ASB say domestic tourism within New Zealand is 40 per cent larger than inbound tourism, and the switch towards domestic tourist experiences for New Zealanders will lessen the economic hit.
Despite this, they estimate that with closed borders, the country’s GDP will be 3 per cent to 5 per cent lower than it would otherwise be. Job losses are expected to be sizeable, with large direct impacts in the accommodation, hospitality, transport, educational and retail sectors.
England-Hall said the uncertainty over opening borders made it extremely difficult for tourism businesses and offered the following advice: “I would certainly think of how I can be a viable economic and sustainable business for the
foreseeable future off a domestic base.” There was domestic freedom of movement and there was considerable investment going in to drive domestic demand.
This appears to be working. Air New Zealand and Jetstar are scaling up operations faster than expected and England-Hall said some places were booked out months in advance.
“New Zealanders are putting their money where their mouths are and really are doing something new.”
As international markets come back there would be an opportunity to expand and move to higher levels of profitability and growth.
“In terms of the uncertainty it’s tough — some businesses exist only in the international arena and its going to be tough for them — they might survive domestically for a couple of years but it’s not sustainable really long term.”
He said it was difficult to tell how many businesses would fail but his organisation would repeat a survey done during lockdown to check on progress.
Tourism New Zealand had withdrawn staff and marketing overseas by up to 40 per cent in some markets. Some staff had been redeployed to other government agencies but it still had a presence overseas.
It had spend hundreds of millions marketing the country to the world over decades and wanted this country to remain top of mind, especially as other countries reopened their borders.
“We are working hard to keep New Zealand relevant in the hearts and minds of consumers internationally.
New Zealanders are putting their money where their mouths are. Stephen England-Hall, chief executive, Tourism NZ
If you can’t come here for a holiday right now you can certainly drink our wine and drink our beer . . . and buy our products and services overseas.”
He said there remained high interest from the international travel trade in New Zealand. “The problem is they [tourists] can’t come.”
A number of tourism businesses were enjoying success by changing direction. “Some of the luxury destination marketing companies which have historically had an international focus have pivoted to the high-end New Zealand audience and they’ve had success with that.” Businesses needed to be “pushing boundaries” and find new product for the New Zealand market such as staging events like music festivals. Asked whether New Zealand was overpriced, he said it was difficult for his organisation to comment on.
“Supply and demand should be the thing that matches price expectation with price performance — if it’s too expensive people won’t buy it.”
If it was underpriced, businesses were giving away value.
He said it was difficult to compare New Zealand prices to overseas.
“Parts of Thailand and Bali can be much less expensive than New Zealand but that’s a volume thing.”
He said airlines had a role to play in helping people get around the country affordably.
Air New Zealand has attracted some flak for prices over the school holidays. “I think everyone has to play their part. Jetstar is back in operation which is good — competition is a good thing.”
He also said the growing number of isolation and quarantine hotels — some of which are reserved to provide the service until the end of the year — provided a branding challenge for the sector.
Being able to take guests into a hotel that provides services to the Ministry of Health means those properties are going to be more meticulously maintained than normal.
“But maybe there’s a consumer reputational risk that needs to be ... mitigated.”