The upside to a dropping dollar: Tourism gets a lift

Overseas visitors are arriving in record numbers and the currency slide only makes it cheaper to come here.

The sagging New Zealand dollar will provide an extra boost to the tourism industry, still glowing from a record summer season.

The kiwi has slid against all the currencies of our major tourist markets, making this country more affordable for overseas visitors who are arriving in record numbers.

Latest figures show there were just under three million visitors to New Zealand in the year ending May, up 7 per cent on the previous 12 months. May arrivals were up nearly 10 per cent on the previous year.

Tourism Industry Association chief executive Chris Roberts said there were signs the rate of growth in visitor numbers this coming summer could slow after two very strong high seasons, but a low New Zealand dollar would ensure spending per visitor would continue to increase.

"It could take a bit of a breather over summer and while there may not be the same growth in terms of numbers, the lower dollar will make sure the spend will continue to grow," Roberts said.

The tourism industry has aspirations to once again be the top export earner - ahead of dairy - and targeting higher-spending visitors is crucial to this.

In the past year, total spending was up 21 per cent to $8.15 billion, and per capita spending up 14 per cent.

Roberts said the falling kiwi against the Australian dollar was very important, given that country was the biggest source of tourists and New Zealanders' favourite destination.

The kiwi was close to parity in Easter but yesterday was trading at 88.88c, meaning more Kiwis would holiday at home, rather than across the Tasman.

"That's dramatic and likely to change attitudes to domestic tourism. At close to parity, Australia was a very affordable option," he said

Simon Milne, professor of tourism at AUT, said the fall against the Australian dollar was particularly timely.

"In the case of Australia we see an economy that is generally slowing down - they're our major market so it's good for us in that we can lessen the impact of that by having a weakening dollar," Milne said.

Australians were less likely to take long-haul trips and look across the Tasman instead.

"In all those respects we see the weakening New Zealand dollar as having a positive impact - deciding to purchase a holiday is one dimension but once they've decided to come, it just makes them feel more comfortable about spending more."

But the news wasn't all good for tourist operators, many heavily reliant on imported fuel.

"They might be hedging but the bottom line is that over time, a low New Zealand dollar means there will be higher charges," Milne said.

Tourism Holdings chief executive Grant Webster said the falling dollar was generally good for his company, although the cost of components in motor homes was going up.

In April, Tourism Holdings upgraded its profit guidance for the current year but said the tailwind from the exchange rate was unlikely to make a real difference to earnings.

Tourism New Zealand chief executive Kevin Bowler said it gave his organisation even more confidence the coming season would be very strong.

"We had some concerns with the Australian dollar and the kiwi dollar reaching parity a month ago but seeing that come back to levels that we're used to was a real relief for us," Bowler said.

"Most of the research around currency and tourism indicate it has a minimal effect on the number of visitors but a profound effect on what they spend when they get here."

New Zealand didn't want to promote itself as a cheap destination based on the value of the dollar.

Tourism NZ was about to launch a marketing campaign around the world. "With the bonus snow falls that we've had in the last couple of weeks and the good exchange rate with Australia, we're set up for a great season out of Aussie."

Slide hasn't put off 'throngs' of Kiwi travellers

New Zealanders are still travelling overseas in droves.

Competitive pressure is keeping a lid on air fares but the Kiwi dollar is not going as far when travellers reach their destination.

Stella Travel general manager of marketing David Libeau said the kiwi was high relative to historic averages.

"I think it's a little bit early - New Zealand-Australia is not back to where it was a few years ago and when you think about the New Zealand-US it's been a lot worse than it is currently and people still travelled then," Libeau said.

The surge in travel to Hawaii and the US mainland may soften "a bit" while travellers readjusted, but Europe was booming, especially river cruising.

"There will be some sensitivities around the price sensitive part of the market," he said. "People are definitely still travelling in throngs. People aren't being put off."