Tourism spending edges towards pre-pandemic level but there’s speed bumps to full recovery

The pandemic pause in tourism growth has eased pressure on visitor hot spots. Photo / Mike Scott

New Zealand’s tourism sector is recovering strongly from the shock of the pandemic but the pool of potential overseas visitors has fallen.

Figures to March last year show a strong recovery in spending by domestic and international visitors to $37 billion, $4b short of the pre-pandemic high of 2019.

International visitors spent $17.6b in the year before borders closed and in the figures released by Stats NZ for the March 2023 year, this had recovered to $10.8b, cementing the place of tourism as the second biggest foreign exchange earner after dairy.

In the 12 months covered, there was a stuttering start to border opening and total visitor arrivals were 2.2 million, compared to close to 4 million annual arrivals just before Covid-19 hit.

That number will recover further in the current 12 months as air capacity has been restored to more than well over 80 per cent of pre-pandemic levels.

But this country also faces increased competition for tourists from rival destinations.

Tourism NZ says the number of those overseas ‘‘actively considering’' coming here has fallen 14 per cent compared to 2019. Cost of living pressure and reluctance to travel long distances had contributed to the decline.

However, the pool is showing signs of recovery, with 131 million “active considers” in key markets as of January this year.

“Tourism New Zealand still has a big job ahead to get more people to consider New Zealand as a holiday destination, but we are in a good position to do this,’' said Tourism NZ chief executive Rene de Monchy.

Cost of living pressures, strong competition from other destinations and readiness to travel post-pandemic have contributed to this decline.

He said that although the pool was smaller in key markets including Australia, Britain, Germany, North America, China, Japan, India, Singapore and South Korea, research from this year showed those in it were keener than ever to come here. New Zealand was now the number one choice for 46 per cent of those in the pool.

‘‘It means they’re primed and they have it high on their bucket list. Now, our job is to go convince [them] to do the planning and ultimately make the booking,’' de Monchy told the Herald.

The US was a major opportunity for New Zealand to drive arrivals and remained the country’s second-largest holiday visitor market. Increased airline connectivity and a strong US dollar makes New Zealand an appealing destination.

Likewise, markets like China, India and Canada have sizeable pools of consumers ready to book.

“The research shows some key knowledge gaps may be holding people back from booking. These include how long it takes to travel to New Zealand, ease of travel around New Zealand and what the weather is like here. Our future activity will address these to encourage visitation,’' said de Monchy.

Tourism NZ markets this country around the world. The previous government cut its budget by $15m a year from 2026 and the new government hasn’t announced any intention to restore full funding.

New Tourism and Hospitality Minister Matt Doocey said the Government would support businesses to help them grow.

He said the results showed the resilience of tourism was due to the grit and determination of businesses around the country.

The Stats NZ figures show tourism directly and indirectly employed 317,514 (down from 370,000 before the pandemic).

De Monchy said that during Covid ‘‘we sadly saw many businesses go under, this included some in the tourism sector. It’s great to see that two years later that 6786 tourism operators are back and providing much-needed jobs.”

Tourism NZ was working hard to encourage visitation, with a focus on the off-peak months to support the sector increase its year-round productivity and sustainability.

Before the pandemic there had been complaints that some parts of the country had too many tourists at some times of the year. The reduced numbers meant this pressure had eased and many New Zealanders had a new appreciation of the value of tourism, said de Monchy.

New Zealand remained a premium destination attracting about 0.3 per cent of global tourists but 0.7 per cent of spending. He said as tourism operators faced increased costs, they needed to ensure they were offering value for money for what they offered.

Tourism Industry Aotearoa (TIA) chief executive Rebecca Ingram said while the data covered last summer, anecdotal feedback from tourism operators this summer is very positive.

‘‘Tourism businesses are buoyant, and the signs are that we can look forward to contributing even more strongly to the country’s economic wellbeing when this data is published again,’' she said.

She said the data, in the Tourism Satellite Account, was normally published in December and she urged the Government to prioritise this and other core tourism data. The push for better information is one of the TIA’s key priorities.

“For tourism in New Zealand to develop sustainably, we need fundamental information about our performance, this ensures we can manage our industry well.”

Grant Bradley has been working at the Herald since 1993. He is the Business Herald’s deputy editor and covers aviation and tourism.