The business events market has been identified as having substantial growth potential. Photo / Thinkstock
The business events market has been identified as having substantial growth potential. Photo / Thinkstock
Free-spending conventioneers could be a big earner for New Zealand's tourism industry. But before we can chase the big events, there's work to do.
On the floor of a conference about conferences, there's excitement mixed with a measure of frustration.
The annual MEETINGS gathering in Auckland in June offered a "speed dating" opportunity for the record number of exhibitors and buyers from around New Zealand, Australia and other countries, including China for the first time.
It was a chance for the people who organise conferences and events to see what destinations can offer, and for venues to woo potential visitors.
Sue Sullivan, chief executive of Conventions and Incentives New Zealand, which runs the event, says exhibitors have had "very positive feedback" and had held more than 6000 meetings. That level of interest was welcome in an industry which has recovered since the depths of the Global Financial Crisis, when companies scaled back on conferences, didn't travel overseas and the incentive travel market was badly hit. Taking staff to holiday resorts was a bad look when shareholders and other workers were suffering.
In New Zealand, the business events market has been identified by the Government as having substantial growth potential, with high-spending delegates or incentive travel winners coming here year round - spreading the load on tourist resources which are increasingly stretched in the high season from Christmas to April.
Last year the Government poured in $34 million to promote business events overseas, and this year tax breaks were introduced for delegates visiting from other countries.
Such visitors can now apply to get back all GST they pay on conference-related spending, as part of a wider scheme to offer tax breaks for business visitors which is expected to cost around $10 million a year.
Minister Steven Joyce. Photo / Mark Mitchell
There are also big new centres planned throughout the country which, when built, will allow New Zealand to chase the very big conferences that this country is losing to other parts of the region. But for now, those grand plans are just that - plans. As long as they remain on the drawing board, and there is uncertainty over their completion, the industry can't go to overseas buyers to sell them.
Sullivan has been in her role for about two months and says that uncertainty over planned large conference centres means New Zealand is in a holding pattern when it comes to bidding for the big events that attract large associations or professional bodies.
"The big numbers go to Australia and we don't see them," she says. "The industry needs dates and then they'll go out and start talking it up. People around the world know it's coming but they need that firm date." Without those dates it's hard to sell, she says, and New Zealand is missing out on getting on the three- to five-year planning cycle for conferences. "It's particularly encouraging that Auckland is doing [in planning a convention centre] what it's doing but it's not being presented. We're missing out on business by not having these dates."
When the deal between SkyCity and the Government to build a $402 million international convention centre was announced, it was agreed it would be completed and ready to welcome its first visitors by September 2017.
However, Economic Development Minister Steven Joyce has said that deadline was "challenging", and apart from some concept drawings, little has been publicly announced by SkyCity - which controversially gets the right to install more pokies as part of the deal.
Last week SkyCity said the project was "progressing well" and the company expects to file for resource consent this year.
Latest international visitor figures show 57,520 overseas people came to this country for conferences in the year ending June 2014, and the most recent numbers provided by Tourism NZ show those visitors were worth around half a billon dollars.
A Ministry of Business, Innovation and Employment survey of conference delegates - local and overseas - showed they were worth $439 million to the New Zealand economy in the year 2010-11. Of that, $194 million was from international delegates.
Although the Government is spending up on promoting New Zealand as a business events destination, Tourism NZ's director of Trade, PR & Major Events, Justin Watson, agrees there are constraints on what the country can chase. "It's fiercely competitive and we need to find our niche. We're building up New Zealand's awareness but we're not actively pitching those larger-scale conferences."THE International Conference and Convention Association is the major global association, and keeps data on where the big conferences go.
Of close to 11,700 regularly occurring association events - those which rotate between at least three countries - New Zealand currently attracts 48. In comparison, Australia gets 231 of those meetings, the United States 722 and Germany 829.
Watson says conference venues in the US can accommodate up to 10,000 delegates, with the biggest events attracted to the bright lights of Las Vegas.
SkyCity's convention centre is due to open in 2017
Auckland In a controversial deal with the Government, SkyCity has committed to build a 3500-seat national convention centre opposite the casino. Completion is due in September 2017, but a start date has not been announced.
Wellington A 2500-seat conference centre attached to a five-star Hilton Hotel would be the third-biggest in the country, and is hoped to open in 2017.
Christchurch The Government will bankroll all the cost of the $284 million convention centre, with announcements on details soon. It remains on track for opening in 2017, and could hold up to 2000 people.
Queenstown A decade-long process has resulted in a commitment to build a $55.5 million centre, with the local council contributing $30.9 million and the Government most of the rest.
Auckland Tourism Events and Economic Development (Ateed) has beefed up its convention bureau in the city, which hosts just under a third of the country's business events.
Chief executive Brett O'Reilly says one of the biggest challenges for Auckland tourism is seasonality - flat out in the peak season but quiet in winter - and the agency sees business events as one of the key ways of making sure more of the industry's capacity is used year-round.
According to Ateed figures on business events, international business visitors spend an average of $365 a night, compared to leisure travellers who spend $220 a night. During the past year the convention bureau bid for 36 international events and won 12 of them with an economic value of $10 million.
O'Reilly says the number of general inquiries was up 50 per cent on last year, lead opportunities up 35 per cent and site visits from overseas up 40 per cent.
"We're seeing an order of magnitude jump of interest in Auckland and sales activity; it's pretty positive."
The convention bureau is also noticing shorter lead times for booking business events in Auckland. A few years ago events were typically booked 12 months in advance, but now they're seeing events booked just one month beforehand.
While the SkyCity centre - with large areas of exhibition space - will eventually be the centrepiece of the industry, the 2011 Rugby World Cup provided a catalyst for other venues, says O'Reilly - the Viaduct Events Centre, the Cloud and Shed 10, both on Queens Wharf.
Not everyone needs a big space. and one Australian buyer at the MEETINGS event, Paul Kerr, says the standard of venues and associated hotels have improved markedly during the past few years.
"The standard of service is wonderful. The standard of hotels has improved everywhere," says the managing director of Aim Higher.
"If they've got decent budgets, corporates expect to have the world's best everything."
He says he typically deals with conference groups up to 300-strong, and large convention centres aren't needed. What is needed, though, are good hotels.
"If you don't have hotels that can service your needs then you're not even in the running."
New Zealand competes directly with Australian cities, he says, but Sydney is expensive and Melbourne lacks hotel accommodation, although the Gold Coast is improving.
Brent Thomas, House of Travel commercial director, says the firm's business has expanded in Australia. "We did see a flattening through 2008-2011 but we're definitely seeing the wallets being opening in the past 12 to 24 months."
A New Zealand buyer at MEETINGS, Janette Lewis, organises annual conferences for Fletcher Aluminium, where around 150 franchisees gather, alternating between the North and South islands, or Fiji.
Excluding air fares, a three-night conference is worth about $200,000 for the destination. "I think some of the smaller regions could do with some larger hotels; it's disappointing that we've got some beautiful parts of the country that people can't go to because they haven't had the facilities."
Tax break likely to lure business visitors, as NZ changes GST rules
Overseas businesses that come to New Zealand for conferences can now claim back GST they've had to pay here.
Under new rules introduced in April as part of a wider scheme for business visitors, they will get a GST refund for conference-related expenses, as long as they register for the non-resident business scheme.
An Inland Revenue spokeswoman says the revenue cost of the new non-resident registration scheme has been estimated at $10 million a year.
The scheme will be managed largely through existing processes and resources, although an extra $120,000 a year has been allocated to support this work.
GST specialist Iain Blakeley from EY says the concession was made largely to make New Zealand's rules consistent with those overseas.
"It's come about as a result of New Zealand's participation in tax policy discussions at OECD level and it's really to align us with other countries' VAT systems, where it's recognised it's not meant to be a tax on business but on consumption in the country where the legislation is." New Zealand businesspeople can apply for tax rebates for similar spending overseas. Blakeley says the IRD will be watching the scheme closely to ensure it is not abused.
He believes the scheme could be a boost for the business events industry.
"This could be pretty significant for them. If they help with the process and make it painless there could be some real benefits there."
The IRD says the refunds will be possible only if the business in question does not carry out a taxable activity or make taxable supplies in New Zealand.
In an example, it says if a United States business organises a conference in New Zealand for its management team and pays all costs associated with the conference - venue hire, accommodation and meals, for example - it can claim the GST paid on its New Zealand business expenses.
The tax break isn't limited to conferences. For example, an overseas company sending staff to New Zealand for training might also be able to claim back any GST paid on things such as course fees, accommodation and meals.
