Covid crunch: Border tax collects half of forecast total during rocky recovery for tourism

Tourism and conservation businesses are in line for $40 million from an international visitor tax – half the total it was expected to raise annually when it was introduced.

The lower levy collection reflects the bumpy start to borders being reopened and the past summer season being described as the most difficult in 50 years.

The International Conservation and Tourism Levy (IVL) of $35 per adult from many countries was introduced in July 2019. Nine months later the pandemic devastated the international tourism sector where visitor numbers plummeted from 3.9 million a year.

In the depths of the pandemic, there were fewer than 2000 international arrivals a month, compared with more than 520,000 during peak months just before Covid hit.

While tourist numbers are forecast to recover towards 2019 levels, the rebound remains choppy.

The Tourism Export Council says the 60.8 per cent recovery of pre-Covid visitors in the 12 months to April this year was encouraging, but full recovery to pre-pandemic numbers is not expected until May 2025.

The council represents businesses that bring in large numbers of tourists and its chairman Scott Mehrtens said this country was six months behind most of the rest of the world in welcoming back tourists, and the first year of open borders had been challenging.

“Unfortunately, for different reasons, the restart of New Zealand’s international tourism recovery was even more of an upheaval than we could have anticipated,” he said in the council’s annual report for the year to April.

“The industry always knew there would be creaks and groans with the restart. Low workforce numbers and unhelpful immigration policies restricting the number of Working Holiday Visa Holders (WHVs) getting into New Zealand put enormous strain and stress on businesses that tried valiantly to care for visitors to pre-Covid standards of service.”

He slammed the ongoing seven-day self-isolation requirement for visitors who test positive for Covid-19. “This created a lot of angst for offshore travel partners who were trying to book their clients to New Zealand but were put off by the prospect that half of a 15-day holiday could be in isolation,” said Mehrtens.

Catastrophic weather and Cook Strait ferry disruption compounded problems.

“Feedback from inbounds said it was the most difficult season ever encountered in 50 years. They never want to go through that again,” he said.

The seven-day isolation requirement will be reviewed by the Government at the end of the month.

The latest Ministry of Business, Innovation and Employment (MBIE) figures show an improvement during the last four months. International visitors totalled 319,000 in June, down 6 per cent from June 2019 levels. This is down from a 24 per cent gap in March.

Canopy Tours has welcomed the approach to spending the visitor levy. Photo / Supplied

Getting a share of $40m

The ministry has released a detailed “investment plan” for the visitor levy. It says the level of funding will allow the Government “to address certain issues”, but remains insufficient to address the full range of challenges the tourism and conservation sectors face.

Funds are split between conservation and tourism investments.

Tourism projects need to be or have the potential to be nationally significant or provide a co-ordinated approach to addressing shared tourism system challenges.

MBIE says it will give priority to nationally significant tourism projects that:

• Support a transition to a regenerative, resilient tourism model
• Reduce tourism’s environmental impact by supporting adaptation and resilience to climate change by supporting low-carbon infrastructure development, and/or actively protecting and/or regenerating natural resources.

The projects must improve the way in which tourism serves communities, including iwi and hapū, by reducing visitor impact and contributing to the communities and local economies that the sector operates in, and uphold Māori rights and interests for tourism.

Nationally significant investments are projects which contribute to significant system change within New Zealand’s tourism sector.

Funded projects should help manage or protect places and deliver kaitiakitanga (for example, by reducing congestion, protecting the environment, and/or improving resilience). They should help the industry reinvest, such as through revenue mechanisms or restorative or regenerative projects, the MBIE document says.

The emphasis on regenerative tourism shows a “much-needed change in mindset” from our Government, says Rotorua Canopy Tours general manager, Paul Button.

“We’re stoked to see the new-look levy investment plan is placing clear importance on regenerative tourism models and the caring of our native tāonga,” he said.

Regenerative tourism shifted its focus away from solely catering to travellers’ needs and places a higher priority on fulfilling the needs of the local communities and destinations it serves.

Encouraging tourism outfits to run regenerative business models would help New Zealand in the long run and contribute to wider efforts to decarbonise the economy.

Button said New Zealand had placed a “concerning” 40th out of 50 in the Forbes Advisor’s top 50 destinations for ecotourism, ranking behind Britain and the United States and well behind Australia which came third on the list.

“Our clean and green image seems to be facing challenges on the international stage.”

Grant Bradley has worked at the Herald since 1993. He is the Business Herald’s deputy editor and covers aviation and tourism.