Soaring holiday costs: Tourism Minister Peeni Henare says some price rises over the top

Tourism Minister Peeni Henare says some prices faced by tourists in New Zealand are too steep and he is monitoring them closely.

The minister said he had raised “extreme” price rises with some operators.

“I do think prices are steep at the moment,” he said.

He appreciated that operators were making up for lost earnings suffered during the depths of the pandemic when international, and at times domestic borders, were closed and it was good that many were back in the black.

“But you don’t have to do it all in the next 12 months. Allow us to build and allow us to make sure that people can enjoy amazing experiences without having to pay extreme amounts.’’

While many overseas visitors benefit from a favourable exchange rate, Kiwis have been hard hit by spiralling inflation costs.

Locals spend more tourism dollars than international visitors overall, and they face surging costs for travel, accommodation and attractions.

Stats NZ figures showed that in the year to March, domestic airfares were up more than 50 per cent and hotel data shows average daily rates were up nearly 15 per cent for the first quarter of the year, compared with the same time in 2019.

New Zealanders’ tourism spending is slowing, which the Ministry of Business Innovation and Employment (MBIE) says could be due to elevated costs as disposable income falls.

Henare said he expected prices to come down as more tourism capacity was added to meet an increase in international numbers.

‘’But it is one of those things I’ll be monitoring closely. As important as it is to talk to the operators, it’s just as important to talk to the consumers and many are saying things are expensive.’’

He is open to discussing differential pricing where Kiwis pay less than visitors from overseas. He’s on the Waitangi National Trust Board and entry to the Treaty Grounds for NZ residents is $30, half of what international visitors are charged.

‘’They have been doing it for some time now. They appreciate that in order for them to run a good operation they need a social licence so they look after the community that they operate in,’’ Henere told the Herald before the Trenz tourism showcase in Christchurch this week.

‘’There are different views across different parts of the tourism sector. I know that consumers in the domestic market are expecting us to have that conversation.’’

In February, the number of overseas visitor arrivals was 64 per cent of the pre-Covid-19 number of 417,900 in the same month in 2019.

Henare said he was comfortable with the rate of recovery, which this year will fall well short of the 3.89 million visitor arrivals 2019, when there were complaints about ‘‘overtourism’' in some areas.

‘’I’m comfortable with the slower rise of rise in the numbers of tourists that come to this country while we tackle some of those bigger challenges like workforce and other things in order to make sure that we’ve got an offering that is amazing for those people who do decide to come here.’’

He was encouraged by figures which show although overall numbers are down, spending by visitors in some areas is exceeding pre-pandemic levels.

MBIE says tourism card spending figures, not adjusted for inflation, show March 2023 continued to exceed March 2019 levels.

Tourism Minister Peeni Henare. Photo / Andrew Warner

Labour shortages

The Government has been under sustained attack from the tourism and hospitality sectors over delays allowing short-term workers into the country.

Henare said he was well aware of the concerns.

‘’I understand and hear the challenges that tourism is facing at the moment. Everywhere I’ve been labour has been one of those matters that has been raised with me.’’

He said New Zealand had changed its immigration settings and numbers of workers coming in had increased. There had also been changes to wage requirements.

‘’We’ve acknowledged that and shortages are difficult as businesses are getting back on their feet which is why for some of the tourism and hospitality roles we allowed them to pay below the median wage requirements in the accredited employer work visa scheme.’’

Walkers take on the Hump Ridge Track in Fiordland. Photo / Tourism New Zealand

But lifting pay for all workers in tourism was important and part of the Government’s goal of a more regenerative and sustainable industry.

‘’There are lots of awesome operators and plenty who pay really well and look after these staff provide career opportunities, but I know that the sector itself will acknowledge it can do better. That’s the opportunity that we have here allow us to grow a workforce that values working in the tourism.’’

A report by hotel consultant firm Horwath HTL says wage rates for many frontline jobs increased by more than 30 per cent where hotels have been required to pay above the living wage rates for positions previously paid at close to the minimum wage.

This wage cost pressure has also pushed up salaries for supervisory and management staff.

Payroll costs are up to 40 per cent of total operating expenses, and even with the higher wages being paid, many hotels are still facing considerable staff shortages, forcing them to restrict the number of bookings and / or reduce restaurant operating hours, Horwath HTL said.