New Zealand as a tourist destination is hot. Conde Nast Traveller magazine, pitched at wealthy American tourists, has just rated New Zealand the world's third most desirable destination after Europe and Australia.
But despite tourist arrivals in the June year rising 10 per cent to 2.2 million, the tourismsector of the sharemarket has been lagging.
The tourism and leisure index, which does not include Air New Zealand, rose 13.9 per cent in the year, against the top 50's 25 per cent rise.
The main reason is that Sky City Entertainment dominates the index and its share price has risen only 2.9 per cent this year.
Sky and other key listed companies in the sector, including Air NZ, Auckland International Airport and Tourism Holdings, reported results last week. For the most part they were pretty solid.
Analyst Bruce McKay of Saffron Capital said this group was so diverse investors could not simply invest in the sector on the prospect of the projected 6 per cent compound annual growth in tourist numbers and expect to reap the rewards.
"Tourism growth has been pretty strong and it's pretty cyclical.
"You'd expect to get gains as the absolute numbers increase but it's not so simple," he said.
One company that follows the numbers is Auckland International Airport, which clips the ticket of about 80 per cent of our arrivals.
Last week it delivered a 13 per cent increase in net profit.
"The growth that we are enjoying here is very much a reflection of the growth in the travel industry in New Zealand," chief executive Don Huse told analysts and media.
"Let me acknowledge the resilience of our business, indeed of the travel industry of New Zealand, that has been demonstrated not withstanding September 11, not withstanding Bali, not withstanding Iraq and not withstanding ... Sars."
