Industry outlines immediate response priorities

19 December 2008
Media Release

Tourism industry outlines immediate priorities for industry response plan

The development of a Tourism Industry Taskforce and increased investment in marketing Destination New Zealand will be the immediate priorities for the tourism industry in its short-term tactical response to the impact of the global economic downturn.

The Tourism Industry Association (TIA) provided Prime Minister and Tourism Minister Hon John Key’s office with its “Briefing to the Incoming Minister” today to update him on the state of the industry and the key actions required to secure the future of New Zealand tourism and ensure the tourism industry continues to be the country’s largest export earner.

TIA Chief Executive Tim Cossar says the tourism industry must adapt quickly to a changing international environment.

“A short term tactical marketing plan is required. We need to increase the marketing investment to keep a strong presence in traditional markets including the UK, the USA and especially Australia. There also needs to be an increased focus on New Zealand’s own valuable domestic travel market,” Mr Cossar says.

“Australia is important and a great opportunity right now. This short-haul market can deliver visitors in the quieter shoulder seasons and is a growing market for ski operators in winter. New Zealand is great value for Australians and that is why we need to ramp up the marketing in this market above all else.

“New Zealand must also find ways to penetrate new markets, like India, the Middle East and Brazil,” Mr Cossar says.

“The industry must have a tactical response to short term challenges over the next 1-2 years and an industry led marketing action plan for growth over the next 2-5 years.

“The development of a Tourism Industry Taskforce chaired by the Minister of Tourism and comprising senior members of both industry and Cabinet would create a powerful whole-of-government approach to issues impacting the sector,” Mr Cossar says.

The tourism industry has experienced sustained growth for the past two decades, but the economic climate has changed rapidly in the past 12-18 months. Key challenges include the slowing global economy, competition from new and emerging destinations, fluctuating oil prices and exchange rates, as well as airline capacity and climate change concerns.

“Most tourism operators are preparing for a tough summer and certainly a tougher winter.
Despite a general slowdown, there have been some recent positive developments with exchange rates moving in favour of international visitors, and more political certainty following both the USA and New Zealand general elections,” Mr Cossar says.

The tourism industry set out its key priorities for the new government in its Tourism Industry Election Manifesto in September. An outline of the tourism industry’s immediate priorities can be found in TIA’s Briefing to the Incoming Minister at http://www.tianz.org.nz/Policy/Policy-Issues.asp

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FAST FACTS

• Tourism contributes close to 10% of gross domestic product (GDP) for New Zealand

• Tourism directly and indirectly employs nearly one in ten New Zealanders.

• Tourism in New Zealand is a $50 million per day industry. Tourism delivers $24 million in foreign exchange to the New Zealand economy each day of the year. Domestic tourism contributes another $26 million in economic activity every day.

• Total tourism expenditure reached $20.1 billion for the year ended March 2007. International visitor expenditure accounted for $8.8 billion or 18.3% of New Zealand’s foreign exchange earnings.

INTERNATIONAL MARKET FACTS

AUSTRALIA
Current situation: 967,000 visitors, $1.7 billion spend, flat, but not declining market

Action required: grow consumer marketing

Rationale: good short term prospect, a close market, good air capacity

UK
Current situation: 300,000 visitors, $1.01 billion spend, declining market

Action required: maintain and grow market share, increase voice

Rationale: good long term prospect, traditionally high yielding market, need presence when economy recovers
USA
Current situation 215,000 visitors, $618 million spend, declining market

Action required maintain and grow share of market

Rationale as for UK

Action required maintain and grow share of market
EMERGING MARKETS

New Zealand also needs compete effectively in emerging and developing markets including India, the Middle East, South America and Russia.

DOMESTIC MARKET
Current situation 55% of market, $11.3 billion spend, critical market to offset international
declines

Action required an industry led approach involving relevant parties is needed to coordinate national marketing activities. There is also an urgent need for a programme of applied research to better understand the drivers of domestic tourism

Rationale helps cushion fall in international visitors

ENDS

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