Speech to 2010 New Zealand Hotel Industry Conference

Thank you for inviting me here to open the New Zealand Hotel Industry Conference.

This is a really exciting time for tourism in New Zealand. The economy is growing again, more people are travelling, and next year we’re hosting the Rugby World Cup.

There is simply no over-stating how important the World Cup will be for New Zealand. It’s the third largest sporting event in the world, and our fantastic country will be in the spotlight for six weeks. We’re expecting at least 85,000 international visitors, and billions more will be watching from home.

Things are certainly looking up.

It’s a great time to think about how you can make the most of the opportunities coming your way.

Your industry has a big role to play in the future economic growth of this country.

I’d like to welcome new Tourism New Zealand Chief Executive Officer Kevin Bowler. Kevin has shown he is extremely optimistic for the tourism industry, and I’m looking forward to working with him.

Bouncing back from the recession

Last year, businesses and families faced the worst global financial and economic crisis since the Great Depression. Uncertainty pervaded markets everywhere.

Internationally, it was the worst year for tourism in decades.

Businesses and households were travelling less, especially on long haul flights. This was made worse by swine flu, which led to a big reduction in travel out of major Asian markets.

Overall, the number of people travelling internationally was down four percent. Many destinations had sharp declines.

Those who were travelling were spending less. Spending by tourists was down 2.2 percent in the year to March.

It is a sign of New Zealand’s attractiveness as a destination that we were the only country that didn’t have an overall drop in visitor numbers.

That proves what we can do. It’s testament to our world-class tourism industry, and the resilience of our tourism businesses.

Although we did have a drop in tourists coming from some long haul destinations, that was offset by an increase in Australian tourists.

We knew that in tough economic times, our Australian friends were more likely to holiday closer to home.

So we took advantage of that, and in March last year gave Tourism New Zealand an extra $2.5 million for marketing in Australia.

The boost in Australian tourists made up for the drop in tourists coming here from other long-haul destinations such as the United States and Japan.

Those tourists are traditionally the high-spending ones, so this year we need to work particularly hard to attract them. I’ll come back to my plan for that shortly.

I’m impressed at what the tourism industry achieved against the back drop of the economic recession.

I acknowledge it was a tough year for some of you. You may have had to make hard decisions about how to position your business.

But you can be proud of what you achieved. And it’s great news for all New Zealanders that the sector is expected to bounce back quicker than originally forecast.

My vision for tourism

Last year at this conference, I spoke about my vision for tourism and how we can work together to achieve it.

To recap, I want us to make the very most of our competitive advantages, and to seize the many opportunities they provide.

That means we need to make New Zealand a higher-value tourist destination. We need to respond to the world as it changes. We need to improve the business environment. We need to work more closely with each other. And we need to make the most of the Rugby World Cup.

Today I want to talk about how tourism can help grow the economy, and help secure a brighter future for New Zealanders.

Tourism growing our economy

Tourism is a huge part of our economy. It is one of our key export industries, making up about 10 per cent of our economy. One-in-ten Kiwis work in the tourism industry.

I believe tourism has the potential to grow far beyond what it is now.

We have many advantages. We have beautiful scenery, delicious food and wine, a unique culture, and a world-leading brand.

Our challenge is to make the most of these advantages, boost tourism earnings, and help grow our economy.

Next week Finance Minister Bill English will deliver a Budget squarely focused on building faster and more sustainable economic growth.

That’s the only way we can create the jobs, higher incomes, and better living standards New Zealanders deserve.

I have no doubt that tourism will play an important role in helping us get the economy growing faster.

That’s why I am delighted to announce today that this year’s Budget will provide an additional $30 million for tourism marketing for the next year.

Of this, $25 million will be used to market New Zealand as a tourist destination overseas, in key places such as Australia, China and the United States.

The other $5 million will be allocated to joint venture initiatives between regional tourism organisations and Tourism New Zealand.

This follows an increase of $20 million in last year’s budget. It will bring our total investment to just under $100 million this year.

The fact that we’re boosting investment in tourism reflects my confidence in the industry to substantially increase the value of tourism to our economy.

Marketing New Zealand

I believe investing in marketing is vitally important. It will help Tourism New Zealand build on the great work it is already doing to promote New Zealand to those high-spending tourists that I mentioned before.

We need to work hard to attract tourists from places such as the United States, China, and Australia. These markets have huge potential.

In China for example, people are taking 54 million trips overseas every year. This is expected to increase to 100 million by the year 2020.

We know we need to focus on attracting high-value visitors who require a high-quality experience while in New Zealand. Now we have the funding to sell that message all over the world.

It is crucial that our marketing efforts are focused on the right markets, and that we target the right audiences. We need to get more bang for our marketing dollars.

Last year, I asked Tourism New Zealand to create a three-year strategy for marketing New Zealand. The new strategy fundamentally changes the emphasis of how Tourism New Zealand reaches markets and potential visitors.

We’re relying less on traditional mass media, and more on new digital technologies like the internet.

This means we can reach a bigger audience with less money. It means we can engage with potential tourists to find out what they want. And it means we can target our marketing towards those higher-value visitors we want to attract.

Take the example of my appearance on the David Letterman show last year, reading out my top 10 reasons to visit New Zealand. There were almost four million people watching the show, but online coverage is estimated to have reached a further 75 million.

By using new technology, it’s possible to reach far greater audiences.

Tourism New Zealand’s recent launch of the 100% Pure New Zealand campaign into Beijing uses this new approach. It means we can reach a bigger audience in China than has been possible before.

At this stage, the additional $30 million in Budget 2010 is for one year. I want to make sure that the boost is delivering improved economic outcomes for New Zealand.

Alongside marketing efforts, the challenge for the industry is to remain price competitive.

Although we are aiming to attract visitors here for a high-quality experience, we are a long way from the rest of the world.

We need to think about the reasons tourists would and wouldn’t choose New Zealand as a destination. And part of that means offering competitive prices for everything from accommodation and airfares to food and wine.

Improving the business environment

The Government is also working hard to create the right environment for you to do business in. We’re committed to helping your business reach its potential, and to lifting the economic performance of this country.

Last week we saw a dramatic fall in the unemployment rate, from 7.1 per cent to 6 per cent. There is always some volatility in these numbers, but it shows that New Zealand has emerged from the recession in stronger shape than many other countries.

Now we need to focus on building faster and more sustainable economic growth. Our economic programme has six pillars. They are:

• A multi-billion dollar investment in infrastructure.
• Cutting red tape and regulation.
• Better business innovation and an ambitious trade agenda.
• Improving education and skills.
• Demanding better, smarter public services.
• And changes to the tax system to make it fairer, so that hard work and enterprise are rewarded.

Many of you run small and medium-sized businesses. Our progress in reducing red tape, reforming the Resource Management Act, and investing in infrastructure will make a difference to you.

We are reviewing regulations such as the Building Act, the legislation governing the electricity sector, and the Overseas Investment Act.

We are reforming the Resource Management Act. This will reduce the costs, delays, and uncertainties.

To help businesses through the recession, we launched a Small Business Relief Package. This makes it easier and less expensive for small businesses to manage their cash flows and pay their taxes.

We’re also boosting investment in infrastructure that will bring benefits to the tourism industry. That includes investing in state highways and broadband

And of course the National Cycle Trail, which I’m pleased to report is progressing very well.

Work has begun on three of the trails, and we expect construction to begin on a fourth soon. Eventually we’ll have trails around the country totalling 2000 kilometres. The Government is investing $50 million over three years for this project.

It’s a great example of New Zealand making the most of our natural assets, and showcasing the very best our country has to offer as a tourist destination.

Attracting business visitors

We’re also looking at the potential for an international-scale convention and exhibition centre that can cater for business visitors.

Attracting more business visitors to New Zealand has the potential to contribute significantly to our economy. When we host business events, we also get the benefits of sharing information, learning new things, and fostering business ties with other countries.

Many businesses around the world cut back on travel in response to the recession. Business arrivals to New Zealand fell by nine per cent last year, but as the global economy recovers, we can expect business travel to recover too.

That’s why the Government is considering how we can host more international business events in New Zealand in the future. Especially in the fastest growing segment of the market – the 1500-plus delegate range.

Economic Development Minister Gerry Brownlee has recently held a series of meetings with venue owners and business event stakeholders in Christchurch, Auckland and Wellington.

They covered three main topics.

First, the possibility of developing an international-scale convention and exhibition centre. Second, the development of a National Business Events Strategy. And third, how the current network of convention venues in New Zealand can work together to attract a greater number of international business events to New Zealand.

The Minister will soon call for expressions of interest. We want your ideas on how the Government can partner with industry to attract more business visitors.

Rugby World Cup 2011

The next big opportunity for us is the Rugby World Cup 2011. And I don’t just mean winning the tournament – although I am behind the All Blacks all the way!

One of my priorities for the Government at the moment is hosting a successful Rugby World Cup. This will be the most exciting and largest sporting event New Zealand has ever hosted.

It is our big chance to showcase New Zealand to the rest of the world, and we’re expecting at least 85,000 visitors.

It will deliver huge benefits to our tourism and hospitality industries, and have a lasting impact on New Zealand’s reputation. A Deloitte report estimates the World Cup will deliver a $1.25 billion boost to our economy.

Next year we’ll be in celebration mode with festival events up and down the country.

You will have heard the recent announcement by Rugby World Cup Minister Murray McCully, about our plans for Queen’s Wharf during the World Cup. We’re going to use it for a fan zone, or party central as it’s affectionately known.

Fans will want to congregate somewhere they can experience the spirit of the World Cup. We think Queen’s Wharf will be a great place for that.

Our plan is to take the old sheds off Queen’s Wharf, and put in place a mobile temporary facility that can host almost 8000 people. I believe it will be a focal point that many Aucklanders, New Zealanders and visitors will enjoy

I’m delighted that communities all over New Zealand are getting in behind the Cup too.

A great example is Bluff. Bluff is going to have two oyster seasons next year. The first will be in March as usual. But they’re going to save part of that catch, so the oysters continue to grow in preparation for their second oyster season – which will kick off in September for the World Cup.

Your role

As hoteliers, you will be a vital face for New Zealand during the Rugby World Cup. Ultimately the thing visitors will remember long after they have gone home is the hospitality and service they received during their stay.

The additional visitors that the Cup brings will provide an important boost during a tourism shoulder season.

As you know, there have been some concerns recently about accommodation pricing for the World Cup. News reports show some visitors are being asked to pay much higher rates during the World Cup than they usually would.

Obviously hotels, motels, and travel wholesalers are going to make fair returns during the World Cup. Market forces will prevail to some extent. It’s a great opportunity for the industry to make some money during what is a quiet tourism season.

But if we take it too far and overcharge visitors, we’ll risk damaging New Zealand’s tourism reputation. We need to balance the opportunity to make money on accommodation with how important our reputation is.

We want to make sure visitors have a truly memorable experience. We want to make sure visitors get a taste of New Zealand and want to come back. You have an important role to play in ensuring their visit is an outstanding one.

This Government is determined to ensure that New Zealand makes the most of every opportunity that the World Cup presents. We want the positive impact of hosting the tournament to be felt long after the teams have gone home, and I’m confident we won’t be disappointed.

The Shanghai Expo

Finally today, the Shanghai Expo, which opened this month, provides another great opportunity to showcase New Zealand to the world. I’m really looking forward to visiting in July.

There are almost 200 countries vying for the attention of the 70 million visitors expected during the six-month-long Expo. I’m probably biased, but I’m sure New Zealand’s will be the best!

The Government has invested $30 million, with the aim of making New Zealand’s pavilion a must see.

Visit the New Zealand pavilion and you’ll see a man-made pohutukawa tree in flower, a giant block of New Zealand pounamu, ancient Chinese and New Zealand greenstone artefacts, and kapa haka group performances.

Carvers from Te Puia are crafting a 10-metre high waharoa, or carved entranceway, at the front of the New Zealand pavilion.

The waharoa is symbolic of the opening of doorways between our countries through which relationships can grow.

We’re going to choose a suitable permanent home in Shanghai for the waharoa and this will be announced when I’m there in July. I hope it will provide a legacy long after the Expo has finished.

Conclusion

Ladies and gentlemen, the National-led Government is strongly committed to tourism. We are determined to grow the industry for the benefit of all New Zealanders

The extra funding I announced today will help ensure that is possible. It has been a tough few years, but now is the time to ensure you are positioned to take advantage of a recovering economy.

I’m really impressed by the talent, the enthusiasm, and the huge potential I see in the sector. I’m confident that we can work together to secure a brighter future for tourism in New Zealand.

Thank you for your hard work. I wish you all the best for a successful conference.

ENDS

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