Every region is grappling with getting the balance right. Difficult decisions are being made across the motu, as communities from Northland to Southland find themselves facing some hard trade-offs to balance the books.
In the face of this tension, many councils are considering reducing or cutting funding for areas that may not be seen as core business. Tourism funding, supporting destination attraction and management, is among the potential casualties that councils are considering.
In Hawke’s Bay, a region facing significant cost pressures post Cyclone Gabriel, a proposal to defund Hawke’s Bay Tourism will, if selected, probably lead to the organisation’s closure. The impact this will have on the region cannot be understated, with the good work done so far being quickly undone, and requiring many years’ work to get back on track.
While basic core services are unquestionably essential, it’s crucial not to overlook the relationship between funding for the visitor economy and the wellbeing of local economies. Tourism funding is important for sustaining the livelihoods of thousands of Kiwis who rely on tourism, and associated industries like hospitality, for their income.
In the year to March 2023, tourism generated a direct contribution to GDP of $13.3 billion, or 3.7 per cent of GDP. The indirect value of industries supporting tourism generated a further $8.8 billion, or 2.5 per cent of GDP. It’s also one of New Zealand’s biggest employers, with the number of people attributed to being directly employed in tourism during the same period reaching almost 190,000. Employment for accommodation and food services for the same period reached almost 150,000.
As well as attracting visitors, tourism funding is critically important for events. From international sporting tournaments like the 2023 Fifa Women’s World Cup where 27,000 people travelled here from overseas, to local festivals, events not only inject much-needed revenue into communities, but bring these communities together.
The recent Supercars round in Taupō is estimated to make a GDP contribution of $18m-$21m; Art Deco Week in Napier generates an estimated $10m; and the recent Pink concerts generated an estimated $4.2m in Auckland and $16m in Dunedin. Similarly, businesses nationwide rely on conventions, conferences, and trade shows to drive foot traffic and generate revenue, all of which benefit from funding.
Tourism and events support bars, cafes and restaurants, accommodation providers, transport services, retail, even local food producers and artisans. Without local support, these businesses face an uncertain future, and the ripple effects will be felt throughout the supply chain, from farmers and producers to artisans and tour guides.
New Zealand’s hospitality sector is our seventh-biggest employer. It relies heavily on visitors and events to sustain businesses large and small in much of the country. From bustling city cafes to quaint bed-and-breakfasts nestled in the countryside, the livelihoods of countless Kiwis are intricately intertwined with the ebb and flow of tourist dollars.
In regions where tourism is a cornerstone of the local economy, the loss of funding could spell disaster for countless businesses already reeling from the economic fallout of the Covid-19 pandemic. Tourism was New Zealand’s biggest export earner prior to the pandemic, and there is no doubt it still has an important role to play in our economy.
A long-term, sustainable funding model is essential to support tourism and hospitality, and this is something that Hospitality NZ, alongside many others, is keen to resolve. Relying solely on general rates places undue pressure on ratepayers and fails to account for the broader societal benefits of tourism investment.
New Zealand’s hospitality sector is more than just a collection of businesses; it’s a reflection of our nation’s spirit and identity. As councils grapple with the daunting task of charting a course for the future, they must recognise the intrinsic value of tourism funding in sustaining vibrant, resilient communities.
Enduring funding is needed to ensure we can continue to rebuild, but until that is achieved, the support that councils have provided needs to be extended. Without that support, the impact on tourism, hospitality and many other sectors that benefit from visitors will be great.
The stakes are high, but the potential rewards — a thriving economy, cohesive communities, and a brighter future for all — are well worth ensuring that secure funding is prioritised.
Steve Armitage is chief executive at Hospitality NZ
