Low dollar not all good for tourism

Visitors do not come here because it's cheap, the man in charge of marketing New Zealand abroad tells GEOFF SENESCALL.


An American tourist visiting the Polynesian Spa pools in Rotorua in winter asked how much a hot soak would cost. Ten dollars, was the reply.

He made a quick conversion into his home currency. "That's $US4 - what's wrong with it?" he quipped.

The anecdote is recounted by the spa manager, Martin Lobb, who attended a Tourism New Zealand promotion in Hong Kong last month marketing this country as a destination.

While the tourist enjoyed the pool, his response highlights how a low dollar can be a double-edged sword.

This is not lost on the Tourism Board chief executive, George Hickton.

He says he gets many comments about how the cheap dollar must be making his job of enticing tourists much easier.

That is simply not the case, says Mr Hickton.

For a start, his marketing budget for the board's 100 per cent Pure campaign overseas has been hit.

"In the past 12 months, we have lost $3 million worth of purchasing power through the exchange rate."

Mr Hickton makes no secret of his intention to hit the Government up for more cash next year - essential, he says, if the board is to achieve its goal of lifting tourist numbers from 1.7 million this year to 2.5 million by 2004.

Another point which people overlook, he says, is that most operators set their prices for holiday packages to New Zealand months ago, and have already printed them in brochures, so the drop in the Kiwi dollar will take some time to filter through.

Mr Hickton does not mind agents pocketing the gains in the meantime - "It will encourage them to sell a lot more."

But people do not come to New Zealand because it is cheap, he says.

"If you are in Europe, it costs you more to go to New Zealand than anywhere, including Australia.

"The same goes for Japan, the United States and Asia.

"It is the airfare which is the key factor here, not what the dollar is buying, because people who have never travelled to New Zealand before have no idea what the dollar buys."

But Mr Hickton also says that New Zealand should not market itself as a cheap destination.

"Sure, it is good that people think they will get good value. But really, the sort of tourist we want are those who add value. We can't afford massive group tours descending on this country. You look at what happens elsewhere - in Europe for example."

He doubts whether New Zealand could survive that sort of tourism because it would destroy the very thing people come here for.

He believes local inbound tourist operators should be given every encouragement, if the dollar is down, to put up their prices.

As was the case with the American tourist to the Rotorua hot pools, the price could have doubled and he would not have blinked.

The way to raise prices without alienating domestic visitors, says Mr Hickton, is for operators to offer different sorts of packages, from the basic to the de luxe.

While debate goes on about the effects on tourism of the low dollar and the need to attract the right sort of tourist, the fundamental concern is that New Zealand is not getting its market share of global travellers.

It has underperformed in terms of world tourism growth for the past five years, says Mr Hickton.

"If we had followed the world trend of tourism growth, my prediction is we would now be having about two million visitors here a year."

With an average visitor spending $2470 in the latest year, that would bring an extra $500 million-plus into the country.

But without further investment, he says, new markets are not going to be developed.

India, for example, could provide a booming tourism market for New Zealand if the money were put into it.

But continuity is needed, he believes.

"The problem is if you don't keep the brand alive in the minds of tourists, it takes a lot to build it back up."

That is what happened last year during what Mr Hickton calls the board's "time of troubles."

"The problem was that the myriad changes disenfranchised everyone out in the regions and also started to sever the relationships that our staff had with people in the market.

"We were starting to lose the confidence of the very people we actually really needed.

"You can't say to people we will do something in, say, Singapore or China then pull out.

"And certainly people were starting to ask if we were serious about the tourism industry in New Zealand."

That is one reason Mr Hickton was in Asia during the KiaOra tourism trade marketing event in Hong Kong last month.

The show attracted the largest number of New Zealand tourism companies ever to show up at a single overseas promotion.

Forty-five New Zealand operators, ranging from the our biggest tourism company, Tourism Holdings, to NZ Wedding Services, were at the event. They were targeting eight Asian markets, including China, for the first time.

Tourism New Zealand sees China as one of New Zealand's biggest Asian markets. But while China's population is huge, the board estimates the target market consists of only four million people living in three cities.

In recent years, arrivals from China have been flat at around 17,000 annually, but in the months ended April 2000, New Zealand welcomed 27,500 Chinese tourists.

Mr Hickton hopes that will double in the next two to three years.

In a bid to show the sincerity of New Zealand's aim to increase visitor numbers out of China, he travelled to Guangzhou this month to meet local travel agents and officials. He also met the managing director of China's largest airline, China Southern Airlines, to encourage the airline to extend its planned flights to Australia to include New Zealand by next year.

No commitment was given.

* Geoff Senescall travelled to Hong Kong courtesy of Tourism NZ.