Tag Archives: Tourism

Tourism booming in New Zealand and Lions tour still to come.

Recent figures show that the tourism industry is now a bigger export earner that the traditional dairy industry. For the year ending December 2016, total exports of dairy and related products were $12.05bn, accounting for 17.2% of all exports. Over the same period, tourism (including air travel) was worth $12.17bn, or 17.4% of exports. These compare to 18.2% and 16.9% (respectively) for 2015, showing the increasing importance of tourism to the NZ economy. After these two industries, the next largest export is meat, all the way back on 8.4% of total exports, leaving tourism and dairy well out in front. If you look at GDP figures – Tourism accounts for 5.6% whilst Dairy is 5% of GDP.

NZ Goods and Services Exports (Values $m)

Exports - Dairy and Tourism

NZ Visitor arrivals.pngWhat are the drivers behind the tourism numbers?
1. The growth of the Chinese middle class who can now afford to travel overseas and additional carriers operating out of China into New Zealand
2. The impact of The Lord of the Rings and Hobbit films
3. The 2011 Rugby World Cup and 2015 Cricket World Cup boosted arrivals significantly.

Also there are two further events which are bound the increase tourist numbers – The World Masters Games that finished today and the British Lions Tour in June/July. The Lions Tour is bound to have a significant impact on the economy especially with the hype that is currently building which largely comes about as the tour only occurs every 12 years.

British Lions Tour 2005 and its impact on NZ Economy

Contribution to New Zealand’s GDP – 16,000 supporters at approximately $10,000 per trip equates to NZ$160 million or 0.1 per cent of GDP. But spending doesn’t equate to value added. Value added is broadly a third of the initial spend therefore this leaves a direct macro impact on value added of $53 million. Second round multiplier effects increase the impact to NZ$132.5 million or broadly 0.1% of GDP.

Retail sales figures for June 2005 were up 1.2%. Accommodation providers, for example, experienced a 5.1% increase in turnover during June. And spending in bars increased by 3.9% in June from May and spending a café and restaurants increased by 1.3% while liquor sales surged 3.7%.

Some economic pricing invariably led to higher prices in some markets. A terrace ticket cost NZ$100 for the Lions vs All Blacks game at Eden Park but excess demand on the black market did mean that some tickets were double the face value. Also prices in bars and cafés increased significantly in the main centres.

Spending Spree
Sales figures for June and July 2005 released by credit card operator Visa International show visiting Lions fans pumped millions of dollars into the New Zealand economy.
UK and Irish-based Visa card holders spent $42.2 million during the two-month period, more than double the amount spent by cardholders during the same period last year. Below is some of the breakdown:

Hotels, motels, resorts: $5,967,931
Travel agencies: $4,927,429
Vehicle rental: $2,574,812
Restaurants: $2,245,621
Tourist attractions: $1,588,492
Air New Zealand: $1,446,342

Although results didn’t go their way, the Lions supporters certainly had a good time. The impact is bound to be significantly greater this year with numbers of supporters up to around 20,000. However as with the 2005 tour there will significant infrastructure problems in meeting this demand.

After the win in Australia four years ago maybe the Lions could pull off a series win – the last time was 1971.

Importance of Tourism to New Zealand

nz-short-term-arrivalsGiven the growing importance of tourism to the NZ economy, there is a risk that the latest earthquake could adversely impact visitor arrivals. However, looking at the 2010/11 earthquakes, the long-term impact appears to be limited (see graph from ASB Bank).  It is estimated that the impact on visitor arrivals is likely to be small in comparison to the previous quakes, though Wellington through to North Canterbury are likely to see a reduction in visitors. Spare a thought for  Kaikoura, the whale-watching capital, which has experienced a lot of damage and currently has no access routes.

Unlike other sectors  which produce material goods, tourism encompasses a range of industries and is based on characteristics of the consumer, rather than what is being produced by the producer. Feeder industries into the tourism sector include:

Accommodation – Transport – Retail Trade – Food and Beverages – Car Hire – Tourist Sites

Tourism spending – year ended March 2016

  • Domestic = $20,213m ($15,361m spent by households $4,852m spent by business and government)
  • International = $14,486m ($2,747m from international students)

Total = $34,699m

One significant point from the data was that tourism revenue surpassed export revenue from dairy products.

Contribution of Tourism to Gross Domestic Product (GDP) 

  • Direct contribution – $12,873m = 5.6 % of GDP.
  • Indirect Contribution (supplying of goods and services to tourism sector) – $9,815m = 4.3% of GDP
  • Total contribution = $12,873m + $9,815m = $22,688m = 10% of GDP

Employment – the tourism sector is quite labour intensive, with:

  • People employed 188,136 = 7.5 % of total employment.
  • People indirectly employed = 144,186 = 5.7% of total employment.
  • Total 332,322 = 13.2 % of total employment

nz-tourist-figures

Source: Parliamentary Library – Monthly Economic Review  November 2016

NZ trade balance in surplus

Trade figures NZ Jan 16New Zealand’s January trade balance was $8m surplus which is a lot better than the anticipated $271m deficit. Some of the key points:

  • Exports $200m stronger than expectations
  • Imports were down $60m than expectations
  • The lower NZ$ has helped boost trade – exports more price competitive and imports more expensive.
  • Encouraging signs for forestry and fruit
  • Expansion of capital imports which is indicative of robust domestic demand
  • Oil imports reflect lower international prices – oil imports have fallen over $2bn over the past two years. However this has been offset by a reduction in dairy prices.

Tourism Sector

This has been a booming sector with January arrivals 14% higher than this time last year. Chinese tourists have been the main reason for this as arrivals from China have been setting a strong underlying pace in the region of 30-40% for many months now. The graph below shows visitor arrivals since 1983 and expect a blip next year with the British Lions Tour.

Visitor Arrivals

Source: BNZ Economy Watch – 26th February 2016

Rugby events in New Zealand and the multiplier effect.

This graph shows the importance of rugby events to visitor numbers in New Zealand. Both the British Lions Tour in 2004 and the Rugby World Cup in 2011 had the effect of increasing numbers significantly. Analysis completed for Auckland Tourism, Events and Economic Development (ATEED) by Market Economics reveals that RWC 2011 resulted in an estimated NZ$512 million net additional expenditure for Auckland between 2006 and 2012. When flow-on expenditure is added (the multiplier effect), Auckland’s economy grew by NZ$728 million over that period.

The Top 10 sectors that experienced the greatest shares of economic growth over the period 2006-2012 due to RWC 2011 were:

1. Property and business services NZ$202 million

2. Construction NZ$109 million

3. Manufacturing NZ$87 million

4. Accommodation, Cafés, Restaurants NZ$71 million

5. Transport and storage NZ$69 million

6. Retail trade NZ$69 million

7. Wholesale trade NZ$66 million

8. Finance and insurance NZ$57 million

9. Cultural and recreational services NZ$53 million

10. Communications services NZ$28 million

Visitors to New Zealand

Visitors to NZ

Importance of Tourism in New Zealand

Grant Cleland in the November Monthly Economic Review focused on the Tourism Industry in New Zealand. Here are some figures which outline its importance to the New Zealand economy.

The direct value-added contribution to GDP of the tourism industry was $7,250 million in the year ended March 2013, or approximately 3.7 percent of GDP. When the indirect value-added effects* of $9,805 million are included, the total contribution of the tourism industry was 8.7 percent of GDP. The contribution of the tourism industry to GDP (including both direct and indirect contributions) peaked at 9.9 percent in the year ended March 2003.

International tourism expenditure in the year ended March 2013 contributed 16.1 percent of New Zealand’s export receipts of both goods and services for that year. As such, it is one of New Zealand’s largest export earners. Statistics New Zealand ranked international tourism export receipts second in terms of export value, behind dairy products (including casein) which had exports totaling $12,349 million in the year ended March 2013. Meat and meat product exports equaled $5,279 million in the March year.

* these are the intermediate purchases of the ‘accommodation’ and ‘cafes and restaurants’ industries include items such as electricity, bedding, and food purchased from other industries or imports. Source: Statistics New Zealand.

NZ Tourism 2009-13

Tourism and the New Zealand Economy

Here are some statistics – from November NZ Parliamentary Review – referring to the importance of tourism to New Zealand – looks at tourism expenditure and the contribution to employment in the economy.

Some points of note:

2012 – Total tourism expenditure by product:
– $5,119 million – other (which excludes fuel and other automotive products retail sales)
– $4,165 million – air passenger transport of
– $2,900 million – food and beverage serving services.

Generally tourism has been consistent with its contribution to GDP and the value in money terms to the NZ economy. However 8.6 was its lowest as a % but highest in dollar value.

The total number of full-time equivalents (FTEs) associated with the tourism industry was 186,900 in the year ended March 2012 – 9.6 percent of total employment.

Export Revenues Year ended March 2012
* Tourism – $9,558 million
* Dairy Products – $12,704 million
* Meat products – $5,389 million

Dairy products the engine of growth for New Zealand.