Overcoming seasonality key to tourism industry growth
Working out how to attract more international tourists to New Zealand in the off-peak season is one of the biggest challenges facing the industry, tourism leaders say.
More than 1000 delegates from New Zealand and overseas are in Wellington for the country’s biggest annual tourism conference, Trenz.
It is a chance for the industry to sell itself, and New Zealand as a destination, to international buyers, and to demonstrate how it is continuing to recover from the Covid years.
International visitors have returned to 82% of preCovid levels, but about 40% of the industry’s annual value capture came over the summer months, according to Tourism NZ figures.
Tourism NZ chief executive René de Monchy said many businesses fluctuated between ramping up resources and staff for the summer and then scaling them back over the rest of the year.
It was a challenge that needed to be addressed, but as a niche destination, it was also an opportunity as the country currently attracted less than 0.3% of the international travel market, he said.
“Many of our offerings can be enjoyed all year round, so the challenge is how to focus potential visitors on that, and busting some myths about what they can do if they travel here outside of peak season.
“In a world where sustainability is increasingly important, we need sustainable growth, and we need to utilise the fantastic assets we have that are largely under-utilised outside of the summer months.”
If the industry could do that it would help grow its scale, and also help boost the productivity of New Zealand, he said.
“The Government wants the country to double its exports over the next 10 years, and tourism has a part to play in that. Growing outside of summer months is key, but it will not be easy.”
While international travel was back and the industry had a strong summer, there had been a 14% decline in the number of people considering a holiday in New Zealand, he said.
That was due to cost of living pressures, strong competition from other destinations and readiness to travel post-pandemic.
Tourism NZ was focused on marketing competitively to established markets, such as Australia, China and the United States, but also exploring emerging markets, particularly India, de Monchy said.
“But we have to work out how the previous Government’s cut to our budget, which is due to kick in in two years’ time, will impact, if it does still go ahead, and we have to work out how to address that.
“In the immediate short-term, we will be looking to this year’s Budget announcement.”
Tourism and Hospitality Minister Matt Doocey said he was aware of the seasonality issue, and wanted to work with Tourism NZ to look at markets to attract during the off-peak season.
While he was reluctant to be drawn on what the Budget might hold for the industry, he said he had heard the call from the industry for more funding, and nothing was off the table.
He said the international visitors levy, a $35 fee collected through visa applications, had been in place for five years and was up for review, and the Government would be consulting on it.
“I’m also interested to hear industry views around accommodation levies, and I have been impressed by the level of consensus around this in the sector.”
In the past, different regions have looked at visitor levies or bed taxes to help with funding, and the possibility of a national strategy around this has been suggested.
Doocey said he had been on a “roadie” around the country in January to engage with the industry, and it had reinforced to him the responsibility he now carried as minister.
“My role is to take that responsibility, and be the industry cheerleader at the cabinet table, and around the country.
“The Government wants to hear the industry’s issues, and to create an environment to help businesses to flourish and be a pragmatic part of solutions,” he said
Tourism Industry Aotearoa chief executive Rebecca Ingram said there were opportunities to grow the tourism industry, and the best place for that to occur was outside the summer peak.
Overcoming the seasonality challenge would be good for businesses as it made for more cash-flow security and the retention of skilled staff, she said.
“It’s about encouraging greater seasonal and regional dispersal. So how do we get more people to come here out of season, and get them to go out to different places in the regions, and spread the love around.”
But the TIA’s latest survey of its almost 1300 members showed positive changes in the seasonal nature of the workforce.
Seventy-four per cent of respondents planned to hold staff levels over the winter last year to retain skills and be prepared for next summer.
Ingram said the survey also showed there was an overriding sense of optimism, with about 80% feeling positive about the next year, although there were concerns.
“Tourism business owners are conscious of increasing costs and product pricing, followed by workforce retention. Weather-related challenges, climate change related impacts and managing staff wellbeing are also top of mind.”
The summer had exceeded expectations, and she was hearing a common refrain that tourism had momentum and the positive impacts were rippling around the motu, she said.
“When tourism does well, the country also does well,” she said. “The Tourism Satellite Account shows that by March 2023, tourism was already contributing 6.2% of GDP, and visitor spending was creating $3.5 billion in GST.”
Since then, further recovery had taken place as tourism worked to restore its position alongside dairy as the country’s largest export earning sectors, but it was necessary to keep up the momentum, she said.
“We should never underestimate our place in the world. Tourism is a very competitive global market, and events like Trenz are critical for cementing our position and building long-term sustainable business networks. The key for the industry is going to be maintaining the long-term course that it has charted for itself.”
Trenz was officially opened by Prime Minister Christopher Luxon in Wellington on Wednesday night and runs over several days.