Visitors tour the Hobbiton movie set. Photo / Michael Craig
It is 12.30 on a Wednesday afternoon and the Green Dragon Inn is buzzing.
Excited tourists from all over the world are supping mugs of "Southfarthing" ales and cider, custom-brewed for visitors to Hobbiton.
They are at the end of a tour of their favourite movie set, near Matamata, Waikato, which includes a walk around the famous themed village with 44 picturesque Hobbit holes.
For Benedict Kemper and Talke Marschall, soaking up the atmosphere in the working pub where parts of the films were shot is a dream come true.
The couple, from Munster in Germany, saved for almost two years to raise $15,000 for the trip.
Kemper, 26, has been a devotee of Sir Peter Jackson's fantasy movies for a decade. He has been wearing Lord of the Rings jewellery since he was a young teenager.
"To say I am a huge fan of the Lord of the Rings and Hobbit films is a big understatement," Kemper says. "To be on the other side of the world where the movies were made is an experience of a lifetime.
"It has been a very expensive journey and we would not have come all the way to New Zealand if it wasn't for the films."
These sentiments are echoed around the inn by other satisfied movie fanatics from countries such as the United States, China, Korea and Britain.
The six Lord of the Rings and Hobbit films have become one of the most successful franchises ever, netting billions of dollars for Warner Brothers.
Cinemagoers have been rushing to see the third Hobbit film, The Battle of the Five Armies, since its release at the turn of the year, which is good news for New Zealand.
Since the Lord of the Rings films were launched in 2001, there has been a massive increase in visitor arrivals. In 2000, New Zealand had 1.78 million visitors. By 2013 this had increased to 2.71 million.
Since the first Hobbit movie was released three years ago, arrivals have surged to 2.83 million annually and could reach 3 million by the end of 2015.
New figures reveal the latest instalment of "Tolkien-mania" has been boosting the Kiwi economy and attracting record numbers of overseas visitors. Recent surveys show 14 per cent of tourists say the Hobbit films influenced their decision to come here and 22 per cent of international travellers had some form of Hobbit experience .
Kirdan Lees, from the NZ Institute of Economic Research, believes the film phenomenon now accounts for a direct annual spend from overseas tourists of up to $400 million.
"I would estimate about a third of the recent tourism growth is down to the effects of Middle Earth marketing around the world," he says.
"There are now more than 300,000 visitors a year to Hobbiton and that indicates a huge percentage know the films were made in New Zealand and are connecting with them."
Growth in visitors from the US alone was up by 9.5 percent last year and is still rising, Lees says. More Americans are choosing to come to New Zealand over traditional destinations like the Caribbean and Asia.
"It is expensive for people to come here at the moment but despite this, the Hobbit effect is helping significantly to bring them."
Tourism bosses agree a surge in spending from premium markets such as Germany, the US and Britain can only be explained by the popularity of Middle Earth.
Tourism New Zealand has splashed out $30m in the past three years to promote these attractions overseas.
The investment has been well placed. New research shows "film tourism" visitors spend more money than average.
International holiday tourists who said The Hobbit stimulated their interest in coming here spent on average $4400 in New Zealand. Other holidaymakers spent $3700 per person.
The average Hobbit tourist also stayed 18 days here - a day longer than other visitors. They also visited six regions, one more than their counterparts.
In December, Tourism NZ and Air New Zealand paid to transport a slice of Hobbiton to London for the premiere of The Battle of the Five Armies.
An entrance to a Hobbit hole was recreated inside Claridge's hotel where more than 100 media interviews with the cast were conducted.
The Lord of the Rings star Billy Boyd spent three days talking to journalists outside the Hobbit hole, offering up pineapple lumps to visitors.
"We have invested a lot to ensure people see the films and connect them with New Zealand," says Kevin Bowler, chief executive of Tourism New Zealand.
"The movie franchise has had an enormous impact on visitor numbers and spending.
This is a billion-dollar sector and it would be silly not to capitalise on it."
Tourism NZ also hosts several hundred travel agents and media here every year and Middle Earth is included in their itineraries.
"The movies are now part of the New Zealand story and we have to make sure we tell that story to as many people as we can."
The question now is whether the film tourism boom will continue. The Tolkien movies have run their course and arguments between the Tolkien estate and filmmakers means further instalments are unlikely.
Some think we haven't made enough of the opportunity to cash in on the Lord of the Rings and Hobbit movie phenomenon.
Financial commentator Bernard Hickey has taken his two kids to Hobbiton and to the Weta Cave Workshop Tour in Wellington.
He believes neither compare with overseas "film tourism" attractions such as the smash-hit Warner Brothers Harry Potter Studio tour in London, which he has also visited.
"New Zealand wasted an opportunity to create something really spectacular," Hickey says. "Why there is not a proper studio tour in Wellington is a mystery.
"Hobbiton is nice but it is really just a stroll around a paddock. And the Weta Cave is a visit to a small house to see some props in a glass case ... it is over in the blink of an eye.
"The Harry Potter tour costs a small fortune but you get a full day out and a 3D, high-tech experience.
Warner Brothers also made the Middle Earth films and they are just as popular, so why is there nothing similar over here?"
Hickey thinks better infrastructure should be in place, because significant tax breaks were granted to get the movies made here.
"Sir Peter Jackson's films are timeless and will generate love for a very long time to come. The films are worthy of investment in a proper, international-class studio tour in our capital city.
"Can we really expect people to fly 24 hours to New Zealand for a walk about Hobbiton and a cup of coffee when there are far more impressive movie set attractions elsewhere in the world?"
Gandalf actor Ian McKellen has also called for a Middle Earth museum and theme park to be built in New Zealand.
Russell Alexander, general manager at the Hobbiton tours, is upbeat about the popularity of his beloved movie set attraction.
Hobbiton is a joint venture between Alexander's farming family, who own the land, and Sir Peter Jackson.
Tours from the Shire's Rest Cafe operate every 10 minutes and cost $75 a head. More than 800,000 people have taken a tour in the past 12 years and up to 180 people work at Hobbiton at peak periods.
Alexander, a former accountant, is confident the attraction has staying power. He insists his family has so far ploughed all the profits back into the business.
"Some people think compared to other farmers we have won the Lotto," he says. "But it is not like that. It costs a lot to keep this place going and constantly make improvements.
"The Green Dragon Inn, for instance, cost a fortune to build. But it was worth it and we are continually looking for ways to give visitors a memorable experience.
"We look at this as a longterm operation and the fruits will come in time.
"We are experiencing another boom because of the new Hobbit film and that will eventually die down a bit. But we are now an international brand that people associate with New Zealand. Respectfully, our brand name is now beyond the movies.
"As long as the operation continues to be managed well, there is no reason why we can't still be here in 50 years ... that is my vision.
"Just like Salzburg is still benefiting from the success of The Sound of Music."
Does he thinks the brand name has become as popular overseas as the All Blacks have been?
"I couldn't possibly say but I think you are right. For instance, people in China know about The Hobbit, but if you took Richie McCaw there would he get recognised?"
Bowler takes a more measured approach to the ongoing appeal of Hobbiton and other Middle Earth-related attractions.
"We won't be investing as heavily as we have been and perhaps this will be the last big summer of it," he says. "When we were halfway through this campaign I was determined we would not look back and think we could have done more.
"It has been a fantastic ride and will continue for many years yet but we have to start looking now at other events such as the Cricket World Cup to attract visitors."
Meanwhile, back at the Green Dragon Inn, most international Hobbit fans agree the time and cost in getting here is worth it.
Roman Petrovich and his wife, Iryna, spent "an arm and a leg" to travel from Minnesota in the US for a three-week holiday.
A trip to Hobbiton was the catalyst. "We have seen all the movies and consider ourselves to be experts on the films," he said. "But nothing can prepare you for the moment when you turn a corner in the coach and Hobbiton is right there in front of you.
"When that happens you are in a magical world, you soon forget about all the jetlag and the expense."
Film tourism bosses will turn their attentions to
Avatar
in the hope of luring a fresh wave of visitors.
The first sequel in James Cameron's $500 million trilogy, being shot in Wellington, is due for release in 2017 - almost 16 years after The Lord of the Rings placed us firmly on the tourist map.
Dr Rosemary Overell, lecturer in film and communication at Otago University, says experience gained from marketing the Hobbit and Lord of the Rings movies should be invaluable in attracting more overseas visitors.
"Interest in Sir Peter Jackson's fantasy movies will eventually wane a bit, so landing Avatar is an opportunity that should be capitalised on to the max," she says. "The Hobbit films featured a lot of New Zealand scenery and attract people who like to drive around, but Avatar offers a different experience.
"It is set on a fictional planet and will appeal to fantasy and sci-fi fans who will instead want a high-tech day out in a central location.
"The Avatar movies will be massive and should be the platform for investment in a related theme park in Wellington to rival sophisticated entertainment operations in Europe and the United States.
"It would be crazy not to seize and build on this opportunity."
David Perks, chief executive of Positively Wellington Tourism, said conversations would take place as to how best work with Cameron and his movies.
"Wellington prides itself on being a creative city and it is fantastic to have a globally famous creatives like Sir Peter Jackson and James Cameron here," he says.
"We are always looking to bring more visitors to New Zealand and the Avatar series will offer further exciting options for adding to our story as popular international destination for movie fans."
Tourism NZ chief executive Kevin Bowler said the organisation tried to leverage all film production.
"The opportunity the Avatar films could provide the New Zealand tourism industry is still uncertain, however Tourism New Zealand is enthusiastic about investigating opportunities."
Much of the South Island is set to plunge below 0C tonight and tomorrow.