New Zealanders are forecast to keep up their multi billion-dollar spending spree on overseas travel next year after they have spent about $10 billion on trips during the past year.

The increase in the number of air routes and strong consumer confidence fuelled the big spend up overseas and this is expected to continue.

In 2015 New Zealanders spent more than $9.3 billion on overseas travel, according to Statistics NZ and they travelled in even greater numbers in 2016.

More than 2.5 million Kiwis took overseas trips in the past year up more than 7 per cent on the previous 12 months.


Westpac senior economist Satish Ranchhod said there were signs this would continue.

"We have a solid outlook for household spending over the coming year - household spending is supported by a range of factors, most notably the improving labour market and continued low interest rates."

The strong New Zealand dollar, especially against the Australian, British and European currencies, was also encouraging New Zealanders to travel more.

"Reinforcing this strong outlook for spending are the gains we've seen in consumer confidence. Households are feeling more upbeat about their own financial situation and that's likely to reinforce that firm demand for a number of goods and services, including overseas travel," said Ranchhod.

Managing director for Flight Centre NZ Dave Coombes said the big surge in travel was expected to continue into next year.

"We've seen spikes this year to North America, Argentina and to Asia generally and for next year we're forecasting ongoing Asian growth particularly on inbound capacity opening up and we think Europe is ready for a spike," he said..

Other less traditional markets were also showing signs of strong growth including the southern United States, Mexico and the Caribbean.

Air fares dipped to historic lows in real terms during the past year with some fares to Europe below $1250 return and flights to the United States under $1000.


Coombes said he expected fares to remain very competitive, especially given the growth in the number and capacity offered by Chinese carriers - helped by the extension of this country's air services agreement with China. The arrival of Qatar Airways in February would also help downward pressure on prices to Europe.

Another trend he expected to continue was more Kiwis were travelling for leisure in premium economy and business-class cabins as those prices also fall and more seasoned travellers look for more comfort.

However, there was one potential cloud.

"The question is if there's a bit of spike in oil prices how is that going to impact things."
About one third of the cost of operating a long-haul flight is fuel and following an agreement between Opec producers to limit output, oil prices have increased to their highest level since July, 2015.

And Westpac's Ranchhod said rising interest rates and a loss of momentum in the housing market could also dent demand for travel.

"That tightening and interest rates could have a material impact," he said. "We expect that house-price inflation will slow over the coming year - we expect that growth in spending will ease off but it's likely to continue at a pretty solid level."


If the kiwi dollar slid substantially against an increasingly robust United States currency spending power for New Zealanders in the US would be crimped.

House of Travel marketing director Ken Freer said many of our travel trends for the past year were dictated by increased capacity to new destinations.

When airlines chose to fly somewhere new from New Zealand, particularly somewhere less-common for Kiwi travel, such as Vietnam or South America, New Zealanders were likely to jump at the opportunity of travelling somewhere new.

"2016 has been a fantastic year for travel, and we're hoping to see even sharper fares and more flight routes come available for Kiwi travellers next year," Freer said.

General manager of marketing at Helloworld, David Libeau said he expected the strong demand for travel to continue into next year.

"Destinations close to home, including Australia and the Pacific Islands, continue to sell well however the stand-out growth market has been in European river and ocean cruising."


Hawaii and North America remain popular choices, particularly while exchange rates are reasonably favourable. New York was proving particularly popular and baby boomers were embracing the opportunity to travel.