Chinese tourism: The $1 billion gap
On Wednesday it will be a year since New Zealand shut its borders to arrivals from China, and the brutal shock for tourism is still being felt, writes Amanda Cropp.
Hamiltonian Sherry Zhen has switched from guiding Chinese visitors to selling houses, closing her small tourism business for the foreseeable future. Wednesday marks the first anniversary of New Zealand closing its borders to tourists from China, and the days of hosting groups of Chinese Amway staff or small private tours of a Cambridge alpaca farm are long gone for Zhen, who got her real estate licence in July.
Pre-pandemic, China was our second largesttourism market after Australia and spending by 390,000 Chinese visitors in 2019 hit $1.7 billion.
Although some Chinese managed to get their holiday in before the border closure, and some opted to extend their stay, it’s estimated the loss in Chinese tourist spending over the past year is in the region of $1b.
Businesses focussed on China were the first to experience the cold, hard economic reality of Covid-19, and many survivors are still doing it tough.
In Queenstown, Stanley Tang’s Chinese restaurant the Frankton Ale House hasn’t taken a single booking for Chinese New Year, which falls on February 12.
Last Chinese New Year his premises was packed with 700 overseas customers, but the Covid-19 downturn has seen him lay off four of his five chefs and most of his wait staff.
NZ Chinese Travel and Tourism chair Simon Cheung’s fleet of 100 rental vehicles has shrunk to 40, and out of about 500 specialist Chinese tourism operators, he says only a handful are still operating.
Many quit their office leases, sold off their buses and vans, and looked for new jobs in real estate, construction, or taxi driving, because adapting to a purely domestic market was just too hard.
Whispers of a worrying new virus in Wuhan first emerged in December 2019.
By late January the Chinese Government had halted all outbound travel, and the New Zealand Government’s ban on entry followed shortly thereafter.
Arrivals from China plummeted by almost 46,000 in February 2020 and Tourism New Zealand (TNZ) acting chief executive Rene de Monchy recalls board discussions that month on how to ‘‘reenergise’’ the Chinese market once they could travel again.
‘‘The thinking then was still that it was isolated to China.’’
TNZ initially attempted to replace the Chinese with visitors from the US and the UK before the rapid spread of the virus globally led to a full border closure in March.
‘‘We had done some scenario planning ‘what if the Chinese are unable to travel?’ for example, but we never looked at a pandemic as a reason for it,’’ says de Monchy.
‘‘We didn’t have a specific pandemic response plan from a tourism perspective, but we do now.’’
New Zealand-based China Travel Service (CTS) is majority owned by the Chinese Government, and having negotiated the SARs virus outbreak and the global financial crisis during her 20 years at the helm, managing director Lisa Li initially thought Covid-19 could be quickly contained.
‘‘We expected it would settle down by October, and we expected Chinese to come at the end of the year.’’
Instead, all bar 13 of her 70 staff have gone, and the company’s 20th birthday celebration took place via Zoom.
On top of handling a flood of cancellations, Li also found herself ‘‘rescuing’’ hundreds of Chinese who had opted to take breaks in Fiji while visiting friends and family in New Zealand, then ended up stranded there by border closures and flight cancellations.
It was a complicated task coordinating seats on charter flights out of Fiji, so they could connect with flights home to China via New Zealand, because passengers were not allowed to overnight while in transit.
According to Immigration NZ there are still 3629 Chinese here on visitor visas, and a further 29,000 on temporary visas for study or work. Li says some of them are still touring.
Chinese Kiwis tend to book their own domestic travel, but Li is organising specialist small tours to places like the Chatham Islands, or flying customers to the Coromandel for a day’s ocean fishing.
Chinese New Year used to be peak time for many tourism operators, and while some traditional red decorations will still go up, it’s not expected there will be much extra domestic travel over the new year period with most Kiwi families back into work and school routines.
The loss of overseas Chinese holiday visitors is felt broadly because they loved to shop, spending $476 each per day on average.
Chinese were about a fifth of international customers at Torlesse Winery’s cellar door in North Canterbury and co-owner Maggie Rayner says they were big buyers of blackcurrant liqueur and red wine.
Christchurch International Airport sank $100,000 into setting up an e-commerce store on TMall Global so South Island businesses could to continue to sell to Chinese who sampled their products while holidaying here.
The airport’s chief commercial officer, Justin Watson, says Covid-19’s devastation of the Chinese market forced them to cancel the store launch at the last minute.
‘‘We needed the New Zealand piece to make it
‘‘We’ve gone from being a very large tourism business to an SME (small to medium enterprise).’’ Tim Cossar Chief executive, Te Puia cultural centre, Rotorua
work, building that relationship while they were in the country so that could continue when they went home.’’
Pre-pandemic, Chinese accounted for about a third of the half a million of so annual visitors to Rotorua’s Te Puia cultural centre, and chief executive Tim Cossar says the loss of revenue from that market alone is in the tens of millions.
‘‘We will be about 10 to 15 per cent of the size we were prior to Covid, we’ve gone from being a very large tourism business to an SME (small to medium enterprise).’’
Te Puia slashed its prices and recently introduced a new geyser-by-night tour to court domestic custom, and Cossar says local support for the restaurant has been a bright spot in an otherwise dismal time.
Nga¯ i Tahu Tourism’s 14 businesses were also severely affected by the loss of Chinese visitors and its Rotorua attractions, Agrodome and Rainbow Springs, remain closed.
Neighbouring attraction Rotorua Heritage Farm used to welcome three or four large busloads of Chinese visitors a day over Chinese New Year to experience a menagerie that includes sheep, cattle, ostriches, pigs, goats and deer.
Manager Robyn Van den Hurk says support from New Zealanders has allowed them to keep the farm tours running, albeit on a reduced basis, but she is dreading the coming winter.
That said, Van den Hurk appreciates the need to be cautious over reopening the borders – she took
two weeks off work to isolate after serving a customer with Covid who was associated with Auckland’s return to a level 3 alert in August.
It is unclear when Chinese visitors will again be permitted to enter New Zealand, but tourism industry sources suggest it is unlikely to be before 2022, and it could be many years before numbers return to previous levels.
Watson says much will depend on variables such as how countries open up to each other, what proof of vaccination is required, and airline connectivity and flight costs, but indications are that the leisure market will bounce back strongly.
Li has clients eager to return here who are prepared to stay for months, and she says our handling of coronavirus will be a factor in Chinese opting for New Zealand, despite the fact that it is pricier than other destinations that bungled their handling of the virus.
‘‘Once people can travel, I don’t think that they will choose Europe or America for a few years, I don’t think they will be on their list of countries, and that will make us stand out.’’
Meantime Li is pinning her hopes on a TransTasman bubble, so she can target more than a million Chinese Australians.
A TNZ survey of Mainland Chinese last year found that of those considering a holiday after international travel restrictions were lifted, 41 per cent would want to come to New Zealand within six months of borders reopening.
Even with all that pent-up demand for overseas trips, de Monchy is not underestimating global competition for tourist dollars.
‘‘We certainly can’t be complacent because it’s not like they’re suddenly going to turn up.
‘‘We’re going to work even harder than we did in the past to promote and market New Zealand to make it enticing for people to come here.’’
However, the risk of a potential backlash against travellers coming from China, where the pandemic is thought to have originated, is something de Monchy is also acutely aware of.
‘‘The warm friendly welcome of New Zealanders is the X-factor that everybody talks about, including the Chinese.
‘‘If we lose that, we lose our appeal as a destination, so it’s really important for us to understand the concerns of New Zealanders and, given the year we’ve just had, I think there will be some concerns about Chinese visitors, and probably visitors in general.
‘‘We need to be cognisant of how we respond to that as a country.’’
De Monchy says tourism businesses will also need to adapt to changing visitor expectations.
Health and safety will be a much high priority for visitors, and hotels and attractions will need to look at providing contactless check-ins to avoid long waits in queues.
‘‘They will likely be our expectations when we go overseas as well, we won’t feel comfortable being in a big crowd lining up for an activity.’’