Coronavirus outbreak: tourism braces for 'significant impact on the NZ industry and economy'

Shares in tourism related companies, including Air New Zealand and Auckland Airport, fell on Monday, amid concerns about the impact of the coronavirus outbreak. Photo / Greg Bowker

New Zealand's tourism industry is bracing for a significant hit from the impact of coronavirus, with fears of a sharp downturn in arrivals.

Health officials have begun meeting flights from China, amid spreading global concern about the virus which has spread to a number of countries around the world, including Australia.

Authorities in China have already begun placing restrictions in an effort to contain the virus, including suspending all tour groups and the sale of flight and hotel packages for its citizens headed overseas, starting today.

Coming amid the Chinese new year, the most significant holiday for travel, tourism officials are already warning of a "significant impact" on the industry and the economy.

Tourism New Zealand chief executive Stephen England-Hall said the impact on travel was unknown, but it was likely to impact tourism numbers around the world and New Zealand would not be immune.

"Around 90 per cent of travellers this time last year from China would have come through a Chinese tourism bureau, so the suspension has the potential to have a significant impact on the NZ industry and economy."

In February 2019, an estimated 40,000 tourists visited New Zealand from China.
Economists at Kiwibank said the impact of a sharp drop in Chinese visitors could be significant for tourist operators.

"The Chinese that do venture down to Godzone are among the biggest spenders. As a result, China accounts for a disproportionate amount of total tourist spending."

With the efforts to contain the outbreak at an early stage, several commentators looked to the impact of the Sars outbreak in 2003, which killed around 800 people globally.

While that illness also originated in China, its impact on New Zealand was felt through a severe downturn in visitors from Asia, especially Japan, markets where tourists are often highly sensitive to safety threats.

Shares in companies tied to the tourism sector, including Auckland Airport, Air New Zealand, Tourism Holdings and Millennium & Copthorne Hotels all fell on Monday.

Craig Ebert, a senior economist at BNZ, said the outbreak came at a time when the tourism industry was already under pressure.

"Often these things are temporary and they just rebound out the other side. Having said that, the underlying trend is already dipping into the negative, even before these things came through," with short-term visitor arrival numbers in November down around 3.5 per cent on the same time a year earlier.

BNZ warned yesterday that the potential hit to tourism came when New Zealand's diary production was under pressure due to a lack of rain.

"These issues pose downside risks to our already tepid-looking [economic] growth expectations for the first half of 2020."

Ebert said the impact of Sars was relatively short-lived, with visitor numbers returning to growth the following year.

Shares in tourism related companies, including Air New Zealand and Auckland Airport, fell on Monday, amid concerns about the impact of the coronavirus outbreak. Photo / Greg Bowker

Unlike Sars, it appears the new strain of coronavirus is infectious during an incubation period of up to two weeks, during which people show no visible symptoms.

Authorities in China have put in place unprecedented travel restrictions which are impacting more than 50 million people, including severe restrictions on travel to and from Wuhan, where the outbreak started.

Grant Davies, an investment adviser at Hamilton Hindin Greene, said there was already "a very real risk" of a downturn in visitor numbers from Asian markets, and the response to the outbreak could have a wider economic impact if it was long lasting.

"With the amount of people essentially on house arrest, not out there spending money, that could have an impact on the Chinese economy as well," Davies said.

"That could flow through to New Zealand in the long term, but it's still very early days."