Chinese travel experts say that crucial market will continue to grow strongly but warn that New Zealand hotels can be over-priced.

China is New Zealand's second-biggest source of tourists behind Australia and for the past few years our fastest-growing visitor market. In the year to March, 404,000 visitors from China came here, up 7 per cent on the previous year. Three-quarters of those are here on holiday.

Chinese are spending more as they travel more independently instead of on bus tours, and last year spent on average $4213 for a nearly nine-day stay.

According to Tourism New Zealand, more than 26 million Chinese are actively considering New Zealand for a holiday.

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Managing director of China Travel Service, Lisa Li, has seen the market evolve since setting up here as a one-woman operation in 2000. China and New Zealand had then just signed a Approved Destination Status agreement which let Chinese holiday travellers visit a country in a tour group, the second such agreement after Australia.

"I was fortunate to oversee the path of the Chinese visitors coming to New Zealand. The majority back then were doing the dual destination Australia and New Zealand and at that time New Zealand was just a small part of it. They normally did Auckland and Rotorua for four days, three nights."

Her company handles 40,000 to 50,000 visitors a year and now up to 80 per cent are free and independent travellers.

"Before they just sat in a bus and did the sightseeing. Now they are more and more involved in the outdoor activities. There's a lot of interaction with locals rather than just sitting and watching."

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While huge rates of growth of up to 30 per cent a year are starting to level off, there was still high demand for visiting New Zealand. Chinese tourists were venturing further into wilderness areas but not reporting any concerns about crowds.

"The one big thing that makes New Zealand attractive to Chinese people are the friendly people; our hospitality is just great," Li said.

But she says visitors are concerned about high hotel prices, of up to $800 a night during the peak Chinese New Year period, the most popular for outbound travel from China.
Any increases in hotel prices, whether they be from a national bed tax or targeted rates levied by local authorities, would exacerbate the problem.

"They think already they are paying the price that is not great value, especially during the peak time. They pay more than $500 a night and that is overpriced and so that's something that people need to know," Li said.

She said that hotel facilities were not as good as in competing destinations and Chinese travellers were sometimes puzzled at the lack of service late at night or in the early morning. Hotels in Asia typically provided better service.

Queenstown is a tourism success like no other town but now it faces big city problems such as unaffordable housing and traffic problems.

"That's something that is a danger; we don't want to become a very expensive destination."

Her views are shared by Trevor Lee of TravConsult, Australian-based China travel experts with good knowledge of the New Zealand market.

While group tours were falling as a proportion of the total market they were still the biggest part of the market and sensitive to hotel pricing.

"If they go up, the group market will stop because it works on the lowest yield and highest volume and the wholesalers and the inbound operators work on very low margins," he said. "They will move on a 50-cent change in room rate."

Lee said he was not hearing any concerns among Chinese visitors that New Zealand was overcrowded.

"I think it's a long way off reaching that point. I think operators and government and local councils, everybody is starting to be concerned because there are more people than they've ever seen. This is a first. Anytime there is a first people get worried."

Li said the surge in air travel between the two countries was a game changer. Air New Zealand has been joined by state-owned giants Air China, China Southern and China Eastern and fast-growing regional carriers Hainan Airlines and Sichuan Airlines, which is about to start three times a week services next month.

Return fares in China had fallen to as low as $600 return plus taxes and simplified visa processes had helped fuel the boom, she said.