Tourism put on price alert
NZ is starting to be seen as an expensive place to holiday, writes Amanda Cropp.
Tourism operators are walking a tightrope in trying to attract high end overseas visitors, while remaining affordable for Kiwis.
New Zealand has retained its high ranking in a global tourism index, but price-wise the industry has been put on notice to tread carefully or risk alienating both local and international visitors.
The World Economic Forum’s travel and tourism competitiveness index last year ranked New Zealand 16th out of 136 countries for the second time in a row.
The top 10 were Spain, France, Germany, Japan, the UK, the US, Australia, Italy, Canada and Switzerland.
In terms of price-competitiveness, however, New Zealand was ranked 104th, a 13 point rise but still well behind its 74th placing in 2013.
The poor rating for price competitiveness was identified as a main area of concern in an annual report on the state of the New Zealand tourism industry released last week.
It noted that a slight dip in international visitor satisfaction could be attributed to the cost of accommodation, eating out, public transport, activities, and lack of free internet.
Tourism New Zealand has concentrated on ‘‘value over volume’’ – attracting higherspending tourists who stay longer and travel more widely – in a bid to ease pressure during peak season.
But the report said there was a perception, from both the industry and overseas visitors, that New Zealand was becoming an expensive place to holiday and the quality of accommodation was not always up to scratch.
One of the 354 respondents said New Zealand had to be careful not to price itself off the market, and well-heeled tourists were already beginning to baulk at the higher cost – ‘‘even these visitors are starting to tell us they consider New Zealand prices to be quite uncompetitive now.’’
Others surveyed suggested the value over volume strategy did not work well for all regions, and was better suited to those where capacity was already limited, such as Auckland, Rotorua, Queenstown and Milford Sound.
The report’s author, WelTec tourism lecturer Jamie Smiler, said tourism operators had to remember they were part of a global market, with technology that made it easy to compare prices.
Although New Zealand offered unique experiences that were difficult to replicate, the likes of glacier tours were available elsewhere for a lower cost, and it was a matter of demonstrating that it was worth the extra money to come here, he said.
Remaining price-competitive relative to other close competitors such as Australia, ranked 128th, was important.
Losing local custom to cheaper overseas destinations was also a real threat, and many operators felt little was being done to encourage domestic tourism, which contributed more than half the industry’s $35.9 billion in earnings last year.
‘‘People have choices. You can pay $799 per person and go to the Gold Coast for a week and have everything covered,’’ Smiler said.
‘‘When you compare that with what you would do in New Zealand for a week … there’s always that allure that overseas is somewhere special, whereas your own backyard doesn’t have that.’’
Tourism Industry Aotearoa chief executive Chris Roberts acknowledged it was tricky targeting high-value international visitors, and at the same time keeping costs affordable for domestic travellers.
‘‘If every attraction is high value and therefore relatively high cost, you risk alienating your domestic market, so it’s a really difficult balancing act.’’
Robertss predicted growing use of ‘‘dynamic pricing’’ employed by airlines and hotels, and to some extent rental vehicle companies.
‘‘Airlines and hotels in particular change their prices by the hour, depending on demand, whereas a lot of attractions and activities in New Zealand have one price that applies all year, or they might have a winter price.’’
Roberts said New Zealand’s high exchange rate undoubtedly affected our international competitiveness, but the tourism industry did not want to try to compete based solely on price.
‘‘We have to deliver an experience that means it’s good value to come here, and worth paying the money.
‘‘We can’t compete with places in Southeast Asia for example, and we don’t want to go down that route of getting bums on seats and as many people as possible.’’