Domestic tourism is booming as Kiwis get out and explore the country but without international tourists New Zealand will face a deficit of nearly $13 billion. Mark Jennings reports.
It takes 12 overnight trips from someone living in New Zealand to equal the spend of one international visitor.
New research commissioned by Tourism New Zealand has highlighted what is obvious to most companies operating in the sector – low spending Kiwis can’t make up for big spending tourists.
Locals on holiday spend two times more than residents, but international visitors spend three times as much.
On average, an overseas tourist spends $232 per day while a domestic tourist parts with $155.
The Government, through GST and other sources, pulls in $7.3 billion directly from foreign tourists. The GST take is $26 per day from each international visitor.
Tourism New Zealand chief executive Stephen England-Hall says the research, by economists Fresh Info, reveals the importance of tourism to New Zealand’s economic recovery.
“Kiwis are doing a fantastic job travelling domestically but New Zealand will need high value international visitors to sustain the sector and the economy outside weekends and public holidays.”
In the year to March 2019, International visitors spent $17.2 billion in New Zealand while Kiwi’s spent $8.4 billion travelling overseas. Tourism NZ estimates that 50 percent of that outbound spend, will be redirected to domestic tourism, which leaves a $13 billion gap in the sector.
The research also underlines the importance of tourism to regional New Zealand.
If the visitor spend is divided by the number of people who live in a region, Otago comes out on top at $17,500, closely followed by the West Coast at nearly $16,000. There is a gap back to Marlborough at $8,179. The region that benefits the least is Gisborne at $3,304.
“Tourism is a major employer of women and youth and on average every $178,000 of visitor spend creates one new job. These jobs are important for our regions, especially where there may be few other employment options,” says England-Hall.
It takes 42 international visitors to create one job or 480 domestic overnight trips.
England-Hall says the latest research challenges claims that core tourism jobs are “low value”. The average output per employee in core tourism business is $201,424. This compares to jobs in the rest of the economy that average $213,278.
He says it is important to recognise the difference in productivity between businesses which primarily serve visitors such as experiences and accommodation compared with the wider visitor economy, which benefits from visitor spend on things like hospitality and entertainment.
“It is the nature of the capital employed in those businesses and the skills of the people they employ – whether it be teaching you to ski or driving the TSS Earnslaw across Lake Wakatipu – they tend to be higher skilled jobs as opposed to the lower skill set and less capital involved in, say, a café.
“But we should also remember that some of these businesses with lower productivity create social amenity, they create vibrancy in our communities, and are important from a wellbeing point of view.”
Industries that support tourism, such as retail and food and beverage, produce a little over half the amount produced by core businesses, averaging $120,775 per employee.
“Embracing technology and digital capability could lift tourism productivity even further. This could result in higher wages and better standards of living, especially for our regional communities,” says England-Hall.
The insights also show tourism produces 7.4 percent of the country’s greenhouse gases but England- Hall says when you subtract the emissions of foreign airlines that reduces to 4.7 percent and industry’s carbon impact isn’t as bad as some might think.
“The sector is doing some incredible things to reduce or offset carbon with many operators moving towards being Carbon Zero. While there is still work to be done, tourism’s carbon efficiency is improving, and its intensity is lower than other large sectors including agriculture, utilities and mining.”
“It’s incredibly important we have accurate information about the sector to share with Government and industry so we can plan for a future that ensures that tourism gives back more – than it takes – to our people and communities.”
England-Hall says Tourism New Zealand has maintained a “brand presence” in overseas markets and is ready to respond to any relaxation on border controls.
“As soon as we get signs of a change we will shift (our marketing ) from brand to conversion.”
Asked if Tourism New Zealand was planning to change its strategy following tourism minister Stuart Nash’s call to target the super wealthy and eschew backpackers and freedom campers who ‘s**t in our waterways’, England-Hall suggested it was a complex issue.
“What this argument is really about is yield and getting the mix right. We are always better off having a broad base. The broader the mix the better off we are as a country. We need enough volume so that the tourism sector and the community are vibrant and engaged, along with the higher spending tourists to get a holistic benefit.
“We have got to realise that it is a very big economic commitment to come to New Zealand and we are competing against the rest of the world. Argentina has glaciers, the Mediterranean has beaches, Canada and Europe have mountains.
Our share of global tourism is 0.3 percent but our share of tourism spend is 0.8 percent so we already get two and half times more value than other countries, so we do very well, especially when you consider it is sort of illogical and irrational to come to a place that is far away and expensive to get to.
“I think what we are trying to get at with the current debate is that we don’t want tourism to be exploitive, we want the people [who] come here to respect our environment.”
