Is NZ’s international tourism boom over?

Photo by JESHOOTS.COM on Unsplash

The record boom in NZ’s tourism numbers appears to be over with some predicting that the growth rate in international visitor numbers could drop to zero in the next 2 years. However, indications from the GDPLive Premium Tourism Dashboard are that the slowdown actually began as early as mid-2017.

International visitor arrivals reached 3.9 million in 2018, an impressive growth of 35 percent in five years.

Tourism is an essential source of income in NZ, expanding from $25.6 billion to $39.1 billion between 2010 and 2018. The tourism sector is also a significant employer, directly or indirectly employing14.4% of the total number of people employed in New Zealand.

Behind the numbers

Tourism numbers reached an all-time high in December 2018 but have softened in 2019. Why is this? One of the reasons suggested by the tourism industry is a slowdown in global economic growth. The impact of cooling global growth will impact all tourist destinations, and competition for the tourists, particularly the coveted high-value tourists, will heat up.

Tourism growth was driven by increases in arrivals from Australia (+7900) and Taiwan (+1400). The biggest decline was in Chinese visitor numbers (-4900) which fell 11 percent in the first half of this year. Our key markets of Australia, China and the US represent about 58 percent of the total arrivals and about 60 percent of total spending. These are the geographies where Tourism NZ is now directing its efforts.

The GDPLive Premium Tourism Dashboard, which provides real-time estimates of visitor numbers and spend, indicates the slowdown actually began in mid-2017 and reached a low point in October 2018. Since then the rate of growth has been gradually increasing.

Graph showing changes in the rate of growth of international visitor numbers to NZ. Below zero means the growth rate is slowing compared to six-months prior. Above zero means the growth rate is accelerating from the prior six months. Source: GDPLive Premium Tourism Dashboard.

Opportunities and Challenges Ahead

New Zealand is globally recognised as a desirable travel destination. According to the tens of thousands of readers who voted in the 2018 Telegraph Travel Awards it is “The Best Country in the World” — a winning position it has held for the last six years!

While the growth rate is slowing down, international visitor numbers are forecast to reach 5.1 million by 2024, an increase of almost 40 percent from 2017. Most of our visitors will arrive from Australia, with China expected to become our largest market by visitor spend.

However, there are some challenges ahead. Sustainability has become a big issue for many travellers and there are some concerns in the tourism sector that “flight shaming” will decrease the number and frequency of international flights to New Zealand. It seems that this trend is already happening with one in five Western travellers flying less over the past year according to a survey of Americans and Europeans by Swiss Bank UBS.

Being a remote island nation, most of our international visitors arrive on a long-haul flight. Flight shaming, or flygskam as it is known in Sweden where the term was coined, is more common in developed markets of the UK, Europe and North America. Visitors from Mainland China are currently more attuned to their own economic conditions and consumer confidence rather than carbon emissions; however, this may change in the future.

Top New Zealand destinations

Looking at the top 5 destinations in terms of international visitors for November 2019:

You can see the flattening off in international visitor numbers in terms of our top four tourist destinations.

Source: GDPLive Premium Tourism Dashboard

As of November 2019, Northland is the winner in terms of annual percentage growth of international tourism numbers at 22.57 percent with Central Otago (excluding Queenstown) slipping the most.

Source: GDPLive Premium Tourism Dashboard

You can also see this from the trend lines comparing the two regions.

Source: GDPLive Premium Tourism Dashboard

To find out more about the GDPLive Premium Tourism Dashboard you can watch our tutorial here.

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GDPLive is a world-first real-time GDP forecaster, which uses big data and AI to form estimates of economic activity in NZ. Go to: www.gdplive.net

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GDPLive

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GDPLive is a world-first real-time GDP forecaster, which uses big data and AI to form estimates of economic activity in NZ. Go to: www.gdplive.net

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