The Business Herald’s markets and banking reporter.

Visitors flood in despite China slowdown

Chinese New Year, also known as the Spring Festival, falls on February 8 this year. Photo / Emily Hlavac Green
Chinese New Year, also known as the Spring Festival, falls on February 8 this year. Photo / Emily Hlavac Green

China's economic slowdown has the world worried.

Fear about Beijing's ability to manage a rebalancing of Asia's biggest economy has been a big contributor to the rout that has enveloped global financial markets this month.

But New Zealand's tourism industry doesn't expect China's economic woes to put the brakes on fast-growing visitor arrivals from that country.

In fact, local operators are gearing up for their busiest ever Chinese New Year period next month.

Tourism New Zealand chief executive Kevin Bowler says about 55,000 Chinese visitors arrived during a four-week stretch around the holiday last year.

Based on the number of visas being issued, he says that figure is expected to rise by almost 30 per cent, to about 70,000, this year.

"That's partly because of increased air capacity into Auckland and also the new China Southern Airlines service from Guangzhou to Christchurch," Bowler says.

Chinese New Year, also known as the Spring Festival, falls on February 8 this year. It is China's most important holiday, with workers typically taking a seven-day break.

The arrival growth expected for this Chinese New Year period is in line with that seen over the course of 2015. Buoyed by growth in China's middle class, almost 345,000 visitors arrived in the year to November, a 34 per cent increase on 2014 and a massive jump on the 141,289 who arrived in the same period of 2011.

Chinese visitors spent $1.5 billion in New Zealand in the year ended September, with an average spend of $5100, up from $3700 in the previous year, according to the International Visitor Survey.

Their spending compares with an average of $2000 per Australian visitor and $5400 and $4800 respectively from the average British and American visitors, the survey said.

China is New Zealand's second biggest tourism market behind Australia, which contributed a 5.7 per cent lift in arrivals to 1.3 million in the year to November.

And arrival growth has continued despite a devaluation of the yuan, which has made overseas jaunts more expensive for Chinese travellers.

"The people who can afford to come regardless of what's happening in China are still coming," says Lesley Immink, chief executive of the Tourism Export Council.

Bowler says increased air capacity from China has been a boon for the local tourism industry. "The extra services are making a big difference."

There were 36 direct flights a week last year, up from 14 a week in 2013, according to Tourism New Zealand.

In addition to China Southern's Christchurch service, the airline moved to double daily services between Auckland and Guangzhou last year.

"We have great confidence in the Auckland-Guangzhou route due to the high level of tourism demand between China and New Zealand," Mike Ma, China Southern Airlines' general manager for New Zealand, said at the time.

Air China launched a daily Auckland-Beijing service last month, while China Eastern Airlines began operating four flights a week between Auckland and Shanghai in September.

Air New Zealand also has a daily Auckland-Shanghai service, while Cathay Pacific and Air New Zealand operate daily services between Hong Kong and Auckland.

Meanwhile, Sichuan Airlines, based in the southwestern Chinese city of Chengdu, is investigating operating flights to this country, according to Tourism New Zealand.

Air New Zealand's China general manager Nick Judd says Chinese New Year continues to be the airline's strongest period for bookings out of the Asian superpower.

"Across all our gateways - Shanghai, Hong Kong, Singapore and our new alliance route with Air China from Beijing - we see very high loads in the weeks leading up to Chinese New Year and the actual week of Chinese New Year," Judd says.

Vanessa Traille, national sales and marketing manager for Cathay Pacific in New Zealand, says the holiday generates large passenger volumes network-wide for the Hong Kong-based airline.

It is probably more sustainable and more manageable to be growing at a rate half of what we are currently growing.
Kevin Bowler, Tourism New Zealand chief executive

"This is why the New Zealand route receives an additional daily service from December through to February in order to cope with heavy load factors, especially around Chinese New Year," Traille says.

Chinese travellers on group tours typically tag a short visit to Auckland, Waitomo and Rotorua on to a longer itinerary in Australia.

But Immink says there has been solid growth in tourists from China travelling independently, with longer itineraries, in both the North and South islands.

She says operators have been gearing up for this year's influx by putting more Mandarin-speaking staff in frontline roles.

"Up until a few years ago [Chinese New Year] kind of swamped us, but now we've got a more managed strategy," Immink says.

Bowler says he's been surprised that China's economic slowdown hasn't resulted in a downturn in visitor numbers.

Official figures released this week showed gross domestic product growth last year was 6.9 per cent, down from 10.4 per cent in 2010.

"I thought we might have seen a degree of cool-down," he says. "But there's no evidence of that we're seeing."

He points out China's total outbound tourism market runs to around 110 million annual departures.

"Three hundred and forty-five thousand arrivals from 110 million is a pretty tiny percentage so as a result of that I think we could still be gaining a bit of market share even if the overall growth slows a bit."

New Zealand's tourism industry is, however, a victim of its own success, to some extent. Last year Bowler told the Sydney Morning Herald Chinese visitor numbers were "growing faster than we really want".

"It is probably more sustainable and more manageable to be growing at a rate half of what we are currently growing," he said.

Bowler says the strength of arrivals growth out of China is putting a strain on tourism infrastructure such as hotels. Tourists who arrive in New Zealand without bookings over the Chinese New Year period could be hard-pressed to find accommodation, he adds.

Bowler reckons New Zealand could be hosting more than one million Chinese visitors annually within four to five years.

But could the industry cope with those numbers?

"Not at the moment, but we've got a little bit of notice," Bowler says.

"There's a lot of effort going into investment plans in most of our main centres - new hotels - we're seeing a flow of capital into the sector."

Immink says New Zealand needs to be building 10 new hotels a year to keep up with growth in the tourism sector.

"In a way, the success of the airlines is to the detriment of the quality of experience that some visitors will have," she says. "We've got inbound operators who are having to turn business away because they can't get any rooms between November and February."

- NZ Herald

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