Tourism New Zealand is defending its promotion of the country overseas amid growing claims the overall strategy and efforts by the industry are faltering.

The country's biggest tourism company - Air New Zealand - has joined in criticism of the approach and called for urgent action to reinvigorate the industry.

Tourism is New Zealand's second-biggest foreign exchange earner after the dairy sector and while numbers of arrivals increased last year, spending fell by more than 4 per cent.

High growth last decade has flattened out with visitor-night stays and expenditure generated from tourism now steady.


Air NZ's departing chief executive Rob Fyfe and the airline's chairman, John Palmer, told a parliamentary select committee on Wednesday that progress in tourism was nowhere near where it needed to be.

The comments followed calls by other tourism leaders for the industry to stop moaning and get its house in order.

Government agency Tourism New Zealand has an operating budget of $84 million, with three-quarters of that spent on marketing and promotion overseas.

Its chief executive, Kevin Bowler, said his organisation would like to have seen better results than those achieved for the past two or three years, particularly in the higher end of the market.

He said the Christchurch earthquakes, natural disasters in Japan, the global financial crisis and the euro crisis had hit traditional markets.

Bowler said there was a limit to what Tourism NZ could do for an industry that comprised just a few big players including Air NZ and Auckland International Airport.

Air NZ said it spends $100 million overseas on "activities associated with encouraging people to visit New Zealand" and works with tourism bodies and airport companies to make the most of that spending.

"It's in all our interests to promote New Zealand as an exciting and desirable destination and there is enormous scope to work together to achieve that," said Christopher Luxon, group general manager international airline.


The main thrust of Tourism NZ's marketing push remains the 100 per cent Pure campaign launched in 1999 to promote New Zealand as a "unique and stunningly beautiful place to visit".

Bowler said the 100 per cent Pure push was the right one.

"There's a lot of debate about it but not in the offshore markets where other tourism organisations look at our campaign with great envy," Bowler said.

As part of a three-year strategy launched in 2010, the marketing plan was transformed, with the emphasis moving to using digital media to target people who were already actively considering New Zealand as a destination.

Australia and China were now priority markets.

Australians make up about 40 per cent of arrivals while China is forecast to overtake the traditional markets of Britain and the United States by 2014.


This year the New Zealand-made Hobbit movies would be the focus of Tourism NZ's marketing overseas, particularly in the main markets, the United States, Australia, Britain, China, and Europe.

"The films will reach a far greater audience than our marketing campaign could ever hope to," Bowler said.

"It's ensuring that when those films touch people they know there's a strong association with New Zealand - when they come here they can see some of the places that the films were made."

About 6 per cent of overseas visitors who arrived during the time the Lord of the Rings trilogy screened said the movies had influenced their decision to come here.

The Tourism Industry Association represents more than 1500 businesses and its new chief executive, Martin Snedden, said changing markets required operators to change their approach.

Snedden was a central figure in last year's Rugby World Cup.


He said there was negativity within the sector and a perception tourism was stuck in a rut of struggling to come to grips with how to cope with change.

"The chances of doing that successfully are greater if at a higher level there's some co-ordination and cohesion within the private sector and in partnership with the public sector."

Snedden said Tourism NZ was perceived as being a government agency and no matter what they did they would get complaints.

Tourism Holdings chief executive Grant Webster said the outlook was not getting any rosier.

"I would also say that the moaning achieves nothing, we do need to look at how [to] adapt and change - how we reduce costs to become more competitive internationally given where our exchange rate has been," he said.

The country needed to more aggressively pursue benefits from the 100 per cent Pure message, Webster said.


"New Zealand has lost market share, our exchange rate is part of that, airline pricing is part of that so we've got to get more retail focused and very tactical in our approach."