NZ domestic tourism improving but still suffering

New Zealand’s billion-dollar domestic tourism market is showing a decline for the second successive year with the New Zealand dollar taking the blame, according to a  Tourism Ministry report which found that domestic travellers spent $NZ7 billion in the March year, down 0.4% on 2005 and down over 10% on 2004.

The report, based on interviews with 15,000 people showed a significant improvement on the 9% decline the previous year.

Tourism Industry Association chief executive Fiona Luhrs said the industry was concerned about the domestic market as cheaper airfares and the strong NZ currency had encouraged New Zealanders to go overseas for holidays.

The New Zealand Herald reported Ministry Research Manager Bruce Bassett saying that the new data suggested a new balance was being struck by the number of New Zealanders heading overseas at the expense of domestic travel, but the Ministry’s report showed the number of overnight domestic trips taken in the year ended March fell 1.95% to 14.4 million and the number of day trips was down 4.9% at 29.7 million.

Statistics New Zealand data showed the number of short-term departures for the same period was 1.9 million – up 4.9 percent.

Mr Bassett said it appeared New Zealand was over the worst of the decline with a stabilisation of outbound travel numbers and the rate of growth of short-term departures slowing in recent months, with a 2% increase in the year to July and a 1.1% rise in the year to August.

NZ Tourism Minister Damien O’Connor added to the controversy yesterday by saying that taxpayers’ money is best spent promoting New Zealand abroad and not at home, with this comment coming at a time when some in the tourism industry are looking for a greater Government role in the declining domestic traveller market.

Minister O’Connor said, “I think the regional tourism organisations do a good job in marketing their regional product to other New Zealanders and I don’t think there’s a place for Government expenditure in the domestic market, adding, “The domestic market had caused some concern in the last couple of years, but the general agreement across the industry is that if we were to put money into marketing it was probably better focused into Australia, with each dollar spent in Australia generating $25 in return”.

He also said, “Growing the cake for everyone to share as we’re doing with the Australian campaign is a better long-term prospect than spending the money encouraging New Zealanders to travel internally.”

However, in the New Zealand Herald yesterday the NZ AA’s General Manager Tourism Services, Peter Blackwell, said greater Government involvement was critical, with the AA having launched a $2 million tourism campaign called 101 Must-Do’s for Kiwis aimed at getting people to holiday at home.   He added, “We are looking at it as a non-profit association, as something where we think we can lend a hand and especially when nobody else will step up and do it.”  “A huge gap needs to be filled and although regional tourism organisations had a part to play many didn’t have enough funds to “climb on board and actually get the message out.”

National Bank Chief Economist Cameron Bagrie also said in the Herald that a squeeze on household income would hit the domestic traveller sector and that New Zealanders are going to tighten the belt over the coming two years, adding, “You’ve got a Reserve Bank that wants to slow down the economy, now you slow the economy by taking money out of people’s wallets.”  “Overall the tourism sector would be a big star in 2007 but it would probably be the externally dominated elements that would be the key beneficiaries and the key to being relatively cheaper over 2007 was a fall in the value of the currency”.

Report by The Mole