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Challenges still face New Zealand tourism as growth trend continues

Challenges still face New Zealand tourism as growth trend continues
December 10, 2015

With New Zealand tourism on the upswing, the industry is in a good position to take stock of its future direction, according Lincoln University Professor David Simmons.

The newly released State of the Tourism Industry 2015 report shows that the industry is enjoying very strong growth, although seasonality, changes in visitor markets and skill shortages remain some of the biggest challenges.

The report summarises the current state and performance of the industry and includes results from a survey of New Zealand tourism businesses.

The 2015 publication is the fifth in an annual series produced by Lincoln University and the Tourism Industry Association New Zealand (TIANZ).

Commenting on its findings, Professor Simmons explains “total tourism expenditure this year has amounted to $29.8 billion, which is a 10.3% increase.

“However, tourism arrivals always ebb and flow and we need to make sure we’re continuing to trend upwards as we look to the future.

“We should keep our focus on adding value to the New Zealand economy and all of our regions.”

The issue of seasonality has long concerned the industry but rather than improving is becoming more pronounced, according to the report.

Professor Simmons adds “stronger December and February arrival peaks are occurring across most international markets ... with a growing February peak particularly associated with Chinese New Year.”

Of the tourism businesses surveyed, half described seasonality as a business challenge and 48% of those respondents deemed it the most significant challenge they faced.

Professor Simmons says the strongest international growth is coming from Asia and the Americas, at 18.5% and 7.5% respectively.

International tourism expenditure rose by 17% to $11.8 billion in the year to March 2015, contributing 17.4% to the total of export goods and services. Domestic tourism expenditure increased by 6.3% to $18.1 billion.

Explaining this, Professor Simmons stated “international visitors spent the most on transport, while domestic visitors spent the most on retail.”

Recognising the importance of domestic travel to the tourism industry, TIANZ is leading an industry working group to ensure opportunities to boost its value are identified and grasped.

TIANZ Chief Executive Chris Roberts sees that growing domestic tourism may also help the industry smooth out seasonal peaks and troughs, stating “tourism business respondents indicated that maximising domestic tourism potential was one of the industry’s most significant opportunities.”

More than two-thirds of the tourism businesses surveyed said that changing markets were a big challenge for the entire industry, although only a third felt it affected their own business.

Professor Simmons continued, “changes in visitor markets can have significant flow-on effects in the regions.

“For example, the West Coast of the South Island, which is one of only two regions where international expenditure is greater than domestic, generates a contribution to regional GDP that puts it in the top quarter for regional economic impact.”

The report notes that people visiting friends and family in New Zealand represented almost a third of this year’s international arrivals, on which Professor Simmons stated “more than two-thirds of the tourism business respondents also reported catering to these visitors, which suggests they are important across all areas of the industry.”

Direct tourism employment increased by 5.3%, while there was a 5.6% rise in indirect tourism employment. But more than half of the tourism businesses surveyed said they had found it difficult to recruit skilled staff members.

Roberts concluded “staff and skill shortages were the second most significant challenge highlighted by tourism businesses after seasonality.

“This is an issue that TIA is putting significant effort into.

“Last month we released the People & Skills 2025 framework to guide how the industry makes decisions on workforce development over the next decade.

“Ensuring we have the right people in the right place at the right time is a top priority for our industry and critical to achieving our Tourism 2025 goal of $41 billion annual revenue by 2025.”

TIANZ is now working with industry and government partners to prioritise and implement the framework actions.

Click here to read the State of the Tourism Industry 2015.

Image: A balloon tour above the Canterbury plain (top) and the Wellington Sevens (below).

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