Chasing the dragon - tourism and the Chinese

The number of Chinese tourists coming to NZ overtook the number of Japanese last month.

The number of Chinese tourists coming to New Zealand overtook the number of Japanese last month. But is the industry doing enough to tap into this potentially huge market, asks tourism reporter Owen Hembry:

A Chinese tourist wanting to find out when to catch a Fullers ferry to Great Barrier Island would struggle - the company only prints its timetable information in English.

"We've become so inward looking that we've forgotten the fine details that make it easy for tourists," says Fullers Group general manager Michael Fitchett about the local tourism industry.

Considering the potential of the market from mainland China and Fullers' failure to cater with simple things like signs in Chinese, he concedes: "Perhaps it's time we did."

Fullers Group isn't alone in doing little for Chinese tourists. Some tourism figures are concerned that the industry is failing to provide Chinese visitors with the sort of experience they are seeking. They say tourism operators are not ready to capture the potential of the Chinese market - and that potential is huge.

In April, visitors from China outnumbered those from Japan - a key market - for the first time.

Chinese visitors in April numbered 9724, a 42 per cent rise compared with last year. Visitors from Japan fell 27 per cent to 8976.

Statistics New Zealand figures for April placed China behind only Australia, Britain and the United States as the biggest source of tourists. And that is only the beginning. The World Tourism Organisation forecasts that annual visits abroad from China could hit 100 million within 15 years and, unless New Zealand prepares for this wave of newly affluent consumers, it could end up as the poor man's choice.

Paul Yeo, chief executive of the Inbound Tour Operators Council, says China is the fastest developing market the industry has experienced.

"It's like turning on a tap. It can rush out quite rapidly."

And a rush it has been since New Zealand was granted approved destination status by Beijing in July 1999.

Statistics NZ says visitors from China for the year ended March 1997 numbered 15,688 but by last month that had grown to 93,634 - almost 11 per cent up on the previous year.

Japan was still ahead in annual terms with 149,896 visitors, but the Ministry of Tourism has forecast that 188,980 Chinese will visit in 2011, almost level with a forecast of 194,660 Japanese.

Despite their fast-growing numbers, Yeo says Chinese visitors are generally low spenders, partly because they tend not to stay long.

A recent Ministry of Tourism survey of 5000 visitors at Auckland, Wellington and Christchurch airports showed the top spenders were Singaporeans, who spent an average of $4670 - which could have been affected by unusual results in a smaller sample - Germans on $4173 and Britons on $3722. The Japanese, meanwhile, came in at $3511 and the Chinese at $3276.

Yeo says the Chinese are relatively inexperienced travellers who, to a degree, use cheaper group package holidays.

"Chinese aren't at the moment ... the bungy-jumping, jet-boating experience [type] because they don't understand that."

The survey found that 76 per cent of Chinese visitors in 2005 were making their first trip to New Zealand, of whom 37 per cent opted for a tour group, up from 19 per cent in 2004.

Yeo says Chinese are buying on price "and, sadly, one of the concerns we have is that they are buying the low-quality experiences".

Chinese people's lack of experience with international travel could also leave them vulnerable to less scrupulous tour operators, an issue that has led to protective regulation in some parts of Australia.

There are similar concerns in New Zealand but a self-regulatory framework helps to maintain industry standards.

Yeo says some operators earn commissions from taking tourists to particular stores, which is not illegal.

"Where we have a problem is where these visitors are shunted into enforced shopping where they're not given choice, they're not allowed to wander around freely and decide what they want to do."

It is critical for the industry to understand the emerging Chinese market in order to attract more high-yielding visitors and avoid projecting an image as a cheap, bottom-end destination.

"If that comes across, it'll take a long time to recover," Yeo says. "We want to ensure that New Zealand is perceived as a whole range of things which meets their expectations."

Industry workshops organised by state-funded marketing body Tourism NZ have been held in Auckland, Christchurch and Rotorua this month to help the industry to better understand the Chinese market and target high-end tourists.

Tourism NZ chief executive George Hickton says the South Island, in particular, has had little exposure to Chinese, with some operators asking whether they need to bother.

"My view is that you definitely have to be prepared for this market. It is going to be one of the biggest outbound travel markets in the world. Every part of New Zealand needs a China strategy."

Many Chinese visit New Zealand on the back of an Australia holiday and stay just a few days.

That will change when Air New Zealand begins direct flights between Auckland and Shanghai, expected towards the end of the year. "Then I think we're in a different ball game where we have the capacity to develop what we would call a mono-New Zealand holiday and that's seven to 11 days, New Zealand only".

Tourism NZ is well on the way to training up to 1000 travel agents in China on selling New Zealand.

"You've got masses of people who want to come here but who really don't know what the country offers. You've got hundreds and hundreds of travel agents who've never been to New Zealand [who are] selling it.

"So the potential for providing a product that doesn't suit the customer is quite high."

Hickton is also concerned that the industry may fail to prepare properly for the arrival of tourists and then find it has attracted less desirable, low-spending visitors.

This preparation could involve understanding what Chinese visitors like to eat, what they want from a hotel room, what activities they want and better language skills or translation of information.

"You can't manage a market like China by ignoring it," he says. "We need to take it a bit more seriously. It's certainly not a market that's going to confine itself to Auckland, Rotorua and back to Auckland."

Educating the marketplace and successfully promoting New Zealand does not come cheap, and Yeo was disappointed with the provisions in this month's Budget.

The Government announced an additional $63.7 million for Tourism NZ in the next four years, cementing its expenditure at $69 million a year.

"As a nation, it's not enough for the huge return the Government and the country gets out of tourism," Yeo says. "GST alone, the benefits are huge and with the amount we've got we can only struggle against increasing competition around the world because everybody else is throwing a lot more resources at it than we are."

The Ministry of Tourism estimated that the industry supported 10 per cent of the workforce in the year to March 2004, raised $1.3 billion in GST revenue, with total expenditure of $17.2 billion a year and international tourism generating about $7.4 billion a year in export earnings.

Yeo said the Budget had been sold as an increase "but, in fact, there's no net increase at all because all it's done is cement in place various annual allocations, one off, that Tourism NZ had been getting".

The industry had learned the lesson about the need to invest in educating markets but "whether or not we've convinced Government is the issue - they hold the purse strings".

Tourism Minister Damien O'Connor said the Budget raised baseline funding and took spending per head to twice the rate of Australia.

"It's effectively our number one industry and it's got huge growth potential."

However, he said other industries which marketed themselves through means including levies questioned why tourism needed dollars from the taxpayer.

It would be useful if the amount of money the tourism industry was spending itself on promotion could be quantified.

Ensuring New Zealand attracted high-value tourists from the growing Chinese market was, however, paramount.

"We saw in the development of the Korean market early on some huge downsides ... we can't have a repeat of that situation in rapid growth of the Chinese market."

The Government could not dictate an industry position to private businesses "but I'm certainly very aware, as is Tourism NZ, of the need to try and guide that to maximise the benefit".