Looking Ahead to 2010

Date: 22 December 2009

By: Tim Hunter, Tourism New Zealand Acting Chief Executive

It has been a challenging year for tourism worldwide, with an expected 5 per cent decline in outbound travel globally. With visitor arrivals down just 0.6 per cent to 30 November 2009, New Zealand is holding its own.

Australia has provided the biggest growth for New Zealand, with holiday arrivals up 10.3 per cent in the year to November. However, holiday arrivals from New Zealand’s other major markets have declined with China down 6.8 per cent, the US down 8.3 per cent and UK down 10.1 per cent. Korea and Japan have also been in decline, down 35.8 per cent and 24.2 per cent respectively.

It’s been good to see some growth out of our smaller markets of France, Hong Kong, Singapore, Thailand, India and Italy, with The Netherlands also holding its own.

We believe Tourism New Zealand’s work to recession-proof the industry over the last year has helped - we front-loaded spending into key markets prior to summer, increased investment into Australia, placed more emphasis on partnership marketing and invested in promoting winter ski.

But from here on, Tourism New Zealand’s priority is to promote recovery in long-haul markets. The underlying trend is one of growth in our short-haul markets and a decrease in higher-yielding long-haul markets, and that is a trend we need to reverse.

Our overarching strategy is to continue to build the 100% Pure New Zealand brand, increase investment in digital marketing and social media, invest to leverage events like the Rugby World Cup, The Hobbit and new broadcast and film projects, increase public/private partnerships (especially with airlines and regional tourism organisations) and to work with industry to raise quality standards to ensure the 100% Pure promise is delivered and commands a price premium.

The NZD20 million of new funding allocated by the Government last month will be focussed on Australia, China, the US and Europe. A smaller amount will be spent in Japan, South East Asia and India.

We believe that Australia remains a market with promise; having escaped a hard recession the resources boom is back, interest in overseas travel is strong, airfares remain cheap and extra spend by Tourism New Zealand, airlines and RTOs will promote joint venture marketing.

But there are headwinds for us in Australia as travellers shift their preference to long-haul holidays. The exchange rate is making the UK and US more appealing and growth in the number of airline seats on the trans-Tasman route has slowed.

The UK and Europe are telling different stories, with the UK looking likely to be slower to recover from the recession, while outbound travel from other parts of Europe is already going well or picking up.

Tourism New Zealand will be back in the UK campaigning post-Christmas to drive up February/March bookings. We have also increased our focus on Europe this year and we are now completing our evaluation of the potential in Eastern European countries and Russia.

The US is showing signs of recovery, despite stubborn high unemployment. However, competition is stiff from other destinations, particularly Australia. While that means New Zealand needs to remain competitive, we are also seeing the benefit of increased dual-destination traffic from those visiting Australia and New Zealand as air competition has intensified on the US to Australia routes.

As always, awareness is the big issue for New Zealand in the US and Tourism New Zealand’s new investment will be focussed on addressing that. Our first major project America’s Next Top Model is already underway.

China’s economy is growing and confidence is high and Tourism New Zealand is planning additional spending which will take the campaign to Beijing for the first time. We are also focussing on building the growing fully and semi-independent traveller segments, which are there but need nurturing.

The challenge we have in China is finding skilled travel partners to sell fully and semi-independent travel products in order to keep up with the rapidly increasing demand.

Tourism New Zealand is also looking at South America, which provides a combined 21,000 visitors annually across Brazil, Argentina and Chile. We are looking to re-engage with travel sellers in those markets and to work with them to develop itineraries, and to use the Rugby World Cup as a platform in Argentina to promote New Zealand.

Looking forward to next year, there are a number of issues facing New Zealand’s ability to recover from the global recession. Last summer New Zealand lost 5.4 per cent of its international air capacity and this year capacity is down a further 3.7 per cent, with the biggest declines this year on the US and North Asia routes.

For New Zealand and Tourism New Zealand, the next five years will provide a number of strategic challenges. Our fastest-growing markets are those in which our brand is least understood (for example China); off-shore distribution channels are going through radical and rapid change with the adoption of the Internet and we all need to reinvent how we compete online; we need to look at developing enhanced economic value which will depend on creating more visitor experiences that capture increased expenditure; and the authenticity of the 100% Pure New Zealand brand will come under increased international scrutiny.

So, 2010 and beyond will continue to present us with challenges but they are challenges Tourism New Zealand and the tourism industry are well-placed to manage.

Read our November 2009 visitor arrivals media release
Read more about our markets in the online market guides

Source: Tourism New Zealand Feature