Air crisis not all bad news for tourism

By SIMON HENDERY

Tourism operators have been warned to expect a slump of up to 10 per cent in foreign visitors over the next three months as the impact of the aviation crisis hits home.

The figure has been compiled by an industry action group, formed last week to monitor the fallout from the terror attacks in the US and Air New Zealand's financial crisis, and is based on feedback from Tourism New Zealand's overseas posts.

A 10 per cent fall over a year would equate to 180,000 fewer visitors and a $500 million cut in annual income for the industry.

But economists were yesterday painting such a drop as a worst-case scenario.

In a report released yesterday entitled Tourism A Call to the Beaches, Westpac economists Adrian Orr and Richard Sullivan said that although fallout from the US terror attacks was likely to hit most of NZ's inbound tourism markets, the industry would be propped up by more spending from Australian visitors and domestic tourists.

"The fear-of-flying scenario will likely affect all markets, including air travel within New Zealand, to a greater or lesser extent.

"Overall, this is likely to stem growth from most markets, but represent a significant loss from the North American market.

"On a positive note, New Zealanders are less likely to travel abroad, but will still take holidays, boosting inbound tourism.

"Similarly, Australians are more likely to travel to New Zealand than Northern Hemisphere destinations, as New Zealand will be seen as a safe holiday destination."

North American visitors were "likely to slow to a trickle" but the overall impact was likely to be small, Westpac said.

Although businesses heavily exposed to international tourists, like Rotorua and Queenstown, would feel the pinch, areas that New Zealanders visit were likely to fare better than could be expected otherwise.

"An increase in tourists from New Zealand and Australia will hold the industry up through expected tough times, although these visitors tend to be less extravagant spenders, so costs-to-sales ratios are likely to rise."

ASB Bank group strategist Rodney Dickens said a survey by his bank of major hotels, travel agency chains and car rental firms across the country had found the crisis would have only a minor, or even a positive, impact on the businesses surveyed.

Of 18 major hotels across the country surveyed by the ASB, 13 said they had experienced no major effect on bookings.

"It seems we're getting a diversion of some of the honeymooners who normally go to Hawaii coming here," Mr Dickens said.

"Globally there is going to be quite a significant negative factor but it seems that because of our positioning we won't get the full negative effect and we will have some off-setting factors."

But he cautioned that travellers awaiting developments in the US could still be considering cancelling pre-planned holidays to NZ.

Tourism Industry Association chief John Moriarty warned members to take commonsense steps to protect their profitability.

"It would be prudent to review expenditure and to focus on the higher yielding aspects of their business," he said.

"We should not forget that domestic tourism accounts for about 60 per cent of the industry and this is capable of helping to buffer the effects of the international downturn."

Yesterday's tourism action group meeting discussed several ideas to minimise the impact on industry, including:

* Maximising the short-haul visitor potential, particularly the Australian market.

* Exploring the potential for New Zealand, Australia and Fiji to work together on regional marketing opportunities.

* Pursuing opportunities in markets that see New Zealand as a safe and alternative destination.

* Encouraging domestic tourism.