Visitors spend $390m less before turmoil

International visitor spending is down $390 million but the Christchurch earthquake and Chilean volcano have not hit the tourism sector as hard as had been feared, says the Ministry of Economic Development.

Meanwhile, observers say the turmoil in global markets will hit confidence in key visitors markets.

Spending by international visitors during the year ended June was down 6.5 per cent on the previous year at $5.6 billion, with total arrivals unchanged at 2.5 million.

The ministry's tourism research and evaluation manager Peter Ellis said spending by international tourists had been dropping for more than a year even though the number arriving remained steady.

"One reason tourists are spending less per visit still appears to be the extremely high New Zealand dollar in relation to currencies other than the Australian dollar," Ellis said.

The Christchurch earthquakes and the flight schedule havoc caused by the Chilean volcano had not damaged tourism as much as feared, he said.

"These adverse events had their main impact during what is always the low tourism season. On an annual basis the arrivals have held up and spending hasn't collapsed."

Tourism Industry Association policy and research manager Simon Wallace said a positive to take from the latest data was the continual growth of China.

Chinese visitor numbers were up 25.2 per cent for the year ended June at 132,000, with spending up 12.4 per cent at $410 million.

The level of international tourist spending could be increased within the changing mix of visitor markets, Wallace said. "It's about the service, it's about the types of products that we're offering and getting that added value into the products and that will encourage more spend and I think many of our operators are starting to acknowledge that."

The falls in global markets during the past few days would impact confidence in some markets, like the UK and US, which would spill through to tourism. "I think clearly that's the case but with the exchange rate dropping as it has done over the last few days it's actually a good thing because it means that international visitors are getting more for the their dollars here," Wallace said.

Goldman Sachs economist Philip Borkin said UK and US households were paying down debt and overseas travel - particularly to a far away country like New Zealand - was a luxury item for many people.

"When you throw the currency on top of that which makes it quite an expensive destination to even start with it's hardly one where you're going to see strong pick up going forward.

"It's hardly a favourable outcome for the New Zealand tourism sector unless the currency continues to fall, and while that's possible in the near term, we still believe that given the US problems the US dollar will eventually weaken again once we get this little rout out of the way and up goes the kiwi."

INTERNATIONAL TOURISTS

SPEND
* Australia $1.6b (down 5.8pc)
* UK $576m (down 18.4pc)
* US $443m (down 13.9pc)
* China $410m (up 12.4pc)

ARRIVALS
* Australia1.1m (down 0.74pc)
* UK220,000 (down 11.6pc)
* US188,000 (down 3pc)
* China132,000 (up 25.2pc)

Source Ministry of Economic Development; year ended June