How a tourism mecca got its mojo back

New Zealand's first tourist town has come back from the brink.

From the middle of the 19th century, when international visitors started making the epic trek to see the Pink and White Terraces, Rotorua has been a tourist gem.

But more recently, it was losing its mojo, with years of stagnant or only incremental growth in tourist numbers, and attractions and accommodation becoming tired and jaded.

The global financial crisis hit in late 2008, knocking international visitors and spending. By the end of 2012, spending by international visitors in Rotorua had fallen by nearly 16 per cent (against a drop of just 0.9 per cent across the country) and domestic spending was down 1 per cent, while across the rest of the country New Zealanders' spending was up 6.3 per cent.

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"All our metrics were going backwards," says Tom Worsp, consumer marketing manager, Destination Rotorua. "The perception of Rotorua wasn't very good - that's where you went for a plastic tiki and a Maori dance and to be brutally honest, that's what it was.

"It was rundown, it didn't feel safe. The perception was a massive barrier."

Former Labour politician Steve Chadwick was elected mayor in 2013, standing on a platform of promoting spa health and wellness.

"I found a very flat economy and no growth for a decade," she says.

In response, Destination Rotorua was set up as a business unit of the Rotorua District Council.

"We didn't muck around - the tourism industry was ready to partner with us and get things moving," says Chadwick. "Nobody feels positive about themselves when it's not moving - I think they felt they were an industry getting on with their [own] business but needed to partner with the council as an enabler."

The resulting organisation now has more than 100 tourist operators on board. They're chipping in about $500,000 a year to promote what is now "Famously Rotorua" - a figure matched by the council.

Worsp says figures showing the economic impact of tourism were stark.

The perception of Rotorua wasn't very good - that's where you went for a plastic tiki and a Maori dance.

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"If we had done nothing and a status quo approach taken, we would likely be sitting at about $520 million [a year] versus the $711 million we have achieved in the year ended in June."

And while the central North Island tourist mecca lagged after the global financial crisis, for the past two years its visitor spending rates have outstripped the rest of the country.

Infometrics figures for the year to March show Rotorua's GDP increased by 2.9 per cent, compared with 2.3 per cent nationally.

All indications were that the Rotorua economy was in expansionary territory, with the unemployment rate down to its lowest level since 2009.

Latest unemployment figures for the Bay of Plenty show joblessness down 1.1 percentage points to 5.1 per cent - mirroring the national average.

Infometrics says this employment growth, coupled with rising migration and tourism, has increased retail spending in Rotorua by 5.8 per cent.

Chinese visitor Nicole Zheng at the Hell's Gate thermal mud pools. Photo / Stephen Parker
Chinese visitor Nicole Zheng at the Hell's Gate thermal mud pools. Photo / Stephen Parker

Latest Statistics New Zealand data on visitor nights spent in Rotorua commercial accommodation show that local hotels, motels, hostels and holiday parks collectively hosted 134,300 visitor nights for June this year, a rise of 23 per cent or 25,000 nights on the previous year, far exceeding a 12 per cent increase nationally.

Destination Rotorua has targeted tourism earnings of $1 billion by 2030 and Chadwick says it could reach that figure well before then.

"We didn't expect to move this fast but we're really ramping along."

The region promotes its culture, steaming hot pools - and most recently, its dirt - to tourists.

For Rotorua, "dirt is what snow is to Queenstown" as local tourism leaders say; it attracts tens of thousands of mountain bikers every year. Biking is now regarded as one of the main drivers of domestic demand for beds.

Crankworx Rotorua is the annual world circuit elite event that Rotorua has attracted and showcases mountain biking to the world, especially the lucrative North American market.

If we want Rotorua to move forward we have to invest heavily or just wallow as a sector.

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Last month, Destination Rotorua announced it was looking at starting a "mud festival" to add to its events schedule, following the signing of an international event partnership agreement with Boryeong City in South Korea.

Boryeong runs an annual mud festival which attracts more than 3 million visitors a year and the council said it wanted to establish a similar event in Rotorua, based on the city's 150-year history of using mud as a therapy.

The city could also get some spinoff from the Disney movie Pete's Dragon, around which Tourism New Zealand is building a campaign in the United States. Parts of the movie were shot in the redwood forest behind the city.

The Marvelly family has been part of the Rotorua tourism story for the past 30 years, recently selling the Princes Gate Hotel where daughter, singer Lizzie, played her first shows as a teenager in the restaurant.

Lizzie Marvelly is a champion of the city as an ambassador for Destination Rotorua and says it is now living up to the potential it always had.

"It's been amazing to watch the vision of a group of passionate Rotorua tourism advocates become a reality as older tourism offerings in the city have evolved and innovative new businesses have emerged," she says.

Lizzie Marvelly is an ambassador for Destination Rotorua. Photo / Fiona Goodall
Lizzie Marvelly is an ambassador for Destination Rotorua. Photo / Fiona Goodall

Is Rotorua still RotoVegas?

"If the name is intended to be derogatory, I don't think so. Many of us who grew up there (me included) will still call it that with great affection, but I think it has evolved past the negative connotations of the moniker."

Marvelly, who is also a Weekend Herald columnist, says tourism is stimulating the economy and the flow of tourism dollars also helps make the city a beautiful place to live.

"There is still poverty in the community, however, and I know that focusing on children and young people is high on the agenda going forward, which I really support, so I certainly hope that the continued success of tourism in the region can help to drive prosperity and create further opportunities for the people of Rotorua," she says.

Tim Cossar, a former head of the Tourism Industry Association, is the chief executive of Te Puia, a geothermal attraction with an associated arts and craft institute.

He says the current surge in tourism - which has resulted in 3.3 million international visitors a year coming to New Zealand - is the biggest he's seen in this country.

This is probably the biggest period of growth that I've seen in New Zealand tourism.

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While he credits the collaborative approach taken by the council and industry as a driver, the other big factor has been the increase in airline capacity coming into the country.

The Infometrics report shows that in the year to March, capacity was up 11 per cent on the previous 12 months and there have been more flights added since then, notably by United States airlines which have returned to this country.

"This is probably the biggest period of growth that I've seen in New Zealand tourism," says Cossar.

"The sheer amount of air capacity that's coming into the country is priming the market. We tend to be a beneficiary and see it dropping straight on to our bottom line."

Growing revenue is funding a multimillion-dollar redevelopment.

Cossar says his organisation had resisted patching up old buildings and continuing with incremental improvements, instead investing in new school buildings and restaurants.

"If we want Rotorua to move forward we have to invest heavily or just wallow as a sector," he says.

Photo / Alexander Turnbull Library
Photo / Alexander Turnbull Library

"At some point in time the market will do to us what the market did a few years ago, and that's not something I want to be a part of - we've got to continually reinvest.

"The customers aren't the same any longer - they're wanting more differentiated experiences - the whole world has altered and we have to reflect that."

Cossar says the business has grown from hosting 300,000 visitors a year to 500,000 visitors a year since 2012, with the Chinese market driving those numbers.

Te Puia's staff has increased by 30 people to 150 in the past few years - the majority of them Maori, including some fifth-generation tourist industry participants.

"Tourism's been going on since the 1840s," says Cossar. "We are very conscious of those roots and the people out at Tarawera are the forefathers of it. When the eruption happened they moved into the valley that we are in today."

Elsewhere, Skyline Rotorua has got away from selling "pies, fries and fridge magnets" by investing in new restaurants and attractions, including the Redwoods Treewalk, a 500m elevated pathway through the trees.

While Destination Rotorua's Worsp points to three tall construction cranes on the skyline - one building a 4.5-star hotel for the Chow brothers - there are still plenty of vacant shops in the central city.

They've got virtually every tourist operator committed to marketing and promoting Rotorua. They're all in the same waka and they're pulling in the same direction.

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A recent survey by the Rotorua Daily Post revealed 84 empty stores, though that was down from 98 in September.

Worsp says tourist operators have more work to do.

"We've only really nailed the mountain biking; we've still got some way to go on spas and wellness and natural springs," he says.

The big gap was a five-star hotel to keep high end visitors in town.

"At the moment when you talk to the guys at Volcanic Air, their milk run is down to Taupo for the Hilton and Huka Lodge."

And while overcapacity has been a problem for Rotorua accommodation providers in the past - with scores of motels displaying vacancy signs and dropping rates - this is changing.

Infometrics cautions that capacity pressure at peak times may push up prices for visitor attractions and accommodation.

Tourism Industry Aotearoa chief executive Chris Roberts says these days, the RotoVegas label is a positive.

Photo / Alexander Turnbull Library
Photo / Alexander Turnbull Library

"It was possibly a bit of an embarrassment but now it's celebrated in a kitsch sort of way," he says.

The key for the turnaround has been collaboration.

"They've got virtually every tourist operator committed to marketing and promoting Rotorua. They're all in the same waka and they're pulling in the same direction."

Return to Rotorua:


Visitor numbers, year to May

Domestic

2015:

936,247


2016:

1,006,914


• Up 12.1%

International
2015: 445,840
2016: 487,834
• Up 14.2%

- Source: Rotorua Private Household Visitor Monitor