The Chief Executive of Tourism New Zealand, Chris Roberts made a strong closing statement during a recent interview with RNZ.
Tourism businesses have taken one for the team at the moment. [They] are suffering so we can keep the team of 5-million safe. And if we aren’t able to have our borders open, then there is going to have to be more government assistance.Tourism NZ CEO, Chris Roberts.
These comments come off the back of a historically bad high-season for tourism operators. March and April is crunch time for those in the industry, but even if the numbers of domestic bookings surpass expectations, there simply isn’t the numbers to support the pre-COVID averages that kept over 75% of our industry afloat.
The Tourism Council NZ recently released their much anticipated paper detailing the data around our country’s operators and domestic market. They expect that within the next six to twelve months, up to 70% of operators will have to close their doors.
Even suppliers in key locations like Queenstown and the Coromandel had to keep their doors shut over the warmer months in an attempt to keep overheads low. The expectation that it could be another 12+ months before the borders open again means that many are now filling paperwork for liquidation or bankruptcy.
We personally went and saw firsthand how bad the market is during a trip to Otago and Queenstown. While New Years eve was an exciting, loud spectacle of positive energy enjoyed by people who truly deserved it, the unimaginable happened only thirty minutes after the fireworks ended.
It started to rain, heavily.
This rain continued for four days straight and overwhelmed any desire for shopping, activities and clubbing, and by the evening of the 1st, many people had decided to cut their holiday short and drive home. After speaking with a local bar manager, he said to me, “this is probably the worst thing that could have happened to the town”. Our campsite saw all but three people leave due to flooding around the tents.
Funding has almost dried up. Much of what’s left will go to the big players like Air New Zealand and AJ Hacket (maybe).
A controversial plan to pass $290 million of grants and loan scheme – known as the Strategic Tourism Assets Protection Programme, or STAPP – is making headway in an attempt to stop the failure of “iconic” tourism businesses that must remain when the borders open.
(The Ministry of Business and Innovation officials suggested the scheme be halted after much public criticism of “corporate welfare” incentives. MBIE has argued it should be “preserved in Crown Funds” off the back of the wage subsidy scheme and the Department of Conservation’s waiver of fees).
Banks will not lend to operators who do not have a buyer in mind, and with a fragile and temperamental Tasman-bubble in the works, this is likely to be the end of the tourism industry as we know it in New Zealand.
The unpredictability of community outbreaks has meant that a feud between Australia and New Zealand has developed, and any solid border plan is up in the air once again.
Poor agencies in control New Zealand Tourism
Tourism New Zealand, who were behind the 100% Pure New Zealand campaign, have historically focused on the international market and were well placed to bring in interest from overseas. In 2020, they built and ran the Do Something New New Zealand campaign in attempt to encourage domestic tourism to help keep the market healthy.
Historically, 58% of economic spend on tourism was domestic. But that number takes into account foreigners who are here on semi-permanent basis, and would require all 58% of those people to spend heavily during a recession.
Reports from TNZ suggest that while the interaction was high, the results were many trips to beaches, lakes, batches and campsites with little spend on any tour or activity based holiday.
Their newzealand.com website saw millions of visitors every week pre-covid, and while it showcases as many domestic operators who can take the time to fill out a profile, it’s seen it’s user rates significantly decline.
Tourism NZ has a focus on sharing what it is that makes the country unique to international markets. Their objective is to compete with other holiday destinations around the world and bring in as much revenue to NZ as possible. That’s why, when previous Tourism Minister, Kelvin Davis put them in charge of a recovery strategy, it was met with much criticism.
Afterall, Tourism NZ and the work they do, is nothing more than a good marketing agency.
“It’s really important that tourism policy is decided by a proper public sector agency, not a promotion agency” said a source within a similar government agency.
The tourism sector recovery plan was created after more than 1,000 phone calls, industry webinars with almost 2790 attendees (of which Bushman Tours attended), and a Tourism New Zealand business survey – which we also completed.
“We must attract high-value and high-spending visitors who buy into our own vision of sustainability,” Minister Nash said during his speech at last year’s Tourism Industry Aotearoa annual summit.
“We must therefore deliver high-quality visitor experiences and exceed our visitors’ expectations. No longer will New Zealand communities tolerate the worst of our freedom camping visitors, and nor should they. Some, but not all, have abused our renowned hospitality.”
In a Tourism New Zealand document showcasing over 380 emails between agencies, the most debated and hot topic (with over 130 replies) was that of freedom camping and agencies wanting to use this down period to set more strict rules and policies in place. The emails look at ways to attract those big-spenders who seek luxury for a decent cost, but ignores that without open borders, no one is coming. It also dismisses the 62% of young, low income travellers who populate the pre-covid demographics during peak seasons.
It appears therefore that the wrong people are creating strategies alongside leaders who want to focus on an audience, rather than the operators. In fact, it’s a tough task finding any real, credible mention of operational support in any of these communications.
March & April = Crunch time
Chris Roberts has shared the concerns and feedback from many of the country’s operators with an overwhelming number of suppliers concerned about February.
Typically, March and April sees domestic travellers head back to work, schools back open and university students back studying. This period would usually complete the remaining 42% we need to meet our usual $42 billion a year ($1.8 billion in GST) in tourism spend (New Zealand’s largest export earner), of which 75% of suppliers see their majority of annual revenue.
But operators are concerned with the lack of planning and funding available we all know we’ll need. With little hope of a 2021 Trans-tasman bubble unfolding, the industry has had to pivot much of its offerings to survive.
Happy Campers Managing Director, Andy Haslett (who has building experience before becoming an entrepreneur) has moved his team’s operation into cafe and restaurant fit outs in the Auckland region. Only 30 of their 100 campers remain on the road while much of their operation sits dormant, waiting on any sign of border movement.
If it’s essentially ruled out for six months, or the rest of the year, what’s Plan B? How is the Government going to assist tourism businesses who are unable to access their customers?Chris Roberts
With variants of the virus now emerging, Australia playing a concerning hand after New Zealand’s recent community outbreak (halting all NZ travel to the country), and the February high-season coming to a close, it’s not looking like any progress will be made. If Australia happens to open their borders first, it could cause disaster for the industry with many travellers opting to get their time away in a different country to New Zealand.
There is also a risk that the government will see little reason to provide financial aid for the tourism industry when it is essentially putting money down the toilet. As a dying industry, there are better places to put the remaining cash (if there even is any). They will be more inclined to invest in more sustainable markets like manufacturing and trade – who have done reasonably well out of COVID.
Whatever the case, whatever way you swing it, we have a matter of weeks until New Zealand sees the true effect of a broken tourism economy; headlines may start swaying towards the 160k+ jobs at risk in 2021.
What will you do to help?