Speech to Chartered Accountants ANZ Annual Nelson/Marlborough Regional Conference

Introduction

Good morning.

First of all, I’d like to thank Mr Lawrey for the introduction and Chartered Accountants Australia New Zealand for the opportunity to speak today.

I’m thrilled to be here for my first formal speaking engagement as the Associate Minister of Tourism. What an incredible time it is right now for tourism in New Zealand. I’m excited to get involved and be a champion for the sector.

Tourism in New Zealand

The tourism sector is a critical part of New Zealand’s economy. It’s our largest export earner, contributing $14.5 billion to New Zealand’s total exports and $12.9 billion to our total GDP in the year to March 2016.

Tourism also contributes significantly to employment, with 330,000 people employed in tourism-related jobs. Unlike many other industries, tourism jobs are spread across the regions, not concentrated within the major centres.

The outlook for tourism is extremely positive. Visitor arrivals to New Zealand are expected to grow 5.4 per cent a year, reaching 4.5 million in 2022, up from 3.1 million in 2015.

Total international spend is expected to reach $16 billion in 2022, up 65.5 per cent from 2015. And China is expected to become New Zealand’s largest tourism market by spend come 2018.

The tourism sector in New Zealand is well-positioned to capture the benefits from this increase in growth. These benefits can be shared more widely by promoting tourism in different parts of New Zealand and by growing tourism sector employment.

For example, I was pleased to see in the latest monthly regional spending estimates published by MBIE that Nelson showed the greatest growth of any region, with an increase of 14 per cent to $344 million in the year to January 2017.

Tourism Strategy

In December 2015, the Government agreed to a Tourism Strategy with the overall vision of increasing the net economic contribution made by tourism at a national and regional level.

The Strategy identified three main challenges that need to be addressed.

They are:

• Attracting the right visitor mix
• Responding to visitor demand; and
• Ensuring all regions benefit.

Challenge 1: Attracting the right mix

The Government invests about $115 million a year in Tourism New Zealand to help promote tourism activities.

In order to attract the right mix of visitors that will give us the biggest return on our marketing investment, we need to strike a balance between investing in established markets, new high-growth markets, and emerging markets.

To help address the industry’s seasonal nature, Tourism New Zealand recently shifted its focus to marketing New Zealand as a great place to visit outside the peak summer season. It now invests its entire budget in marketing shoulder season travel.

India and Indonesia are prime markets for shoulder season travel — holidaymakers from India tend to visit during autumn, while the peak season for Indonesian visitors is winter.

These two emerging markets present a really opportunity for growth and could help us achieve our goal of “seasonal dispersal”.

Another way we’re attracting high-value visitors at different times is through the Government’s support of major events.

Since 2013, we’ve invested $46 million in 58 events, including the FIFA under 20 World Cup and Cricket World Cup. And with the upcoming British Lions Tour, the sector is set to benefit further.

Tourism New Zealand is also targeting markets with strong economic growth prospects, especially ones with expanding middle classes.

The Chinese market is positioned to be the biggest spender in the next couple of years — providing significant opportunities for tourism operators.

Last year, in order to help operators cater to the growing Chinese visitor market, the Government commissioned ‘Forward Insight and Strategy’ to develop and deliver practical information about the needs, preferences and interests of Chinese visitors, especially those travelling independently.

I’m pleased to report that at the Tourism Ministers’ Meeting in Darwin two weeks ago, New Zealand shared some of this information with our Australian colleagues.

The overwhelming response was that we’re ahead of Australia in this regard.  We’ve kindly offered to share our resources with the Australians, and needless to say, they’ve accepted the offer!

I encourage operators to use the information available on the NZCN Tourism website, and to apply the findings to generate value not only for their customers but for their business as well.

Challenge 2: Responding to visitor demand

The tourism sector needs to continue providing the quality experiences our high-value visitors expect.

While growth in the sector creates economic benefits for the country, it also brings with it a set of challenges. For example, growing tourist numbers are putting pressure on infrastructure in smaller centres.  In some cases, peak tourist numbers can be up to 10 times the local population.

Growing tourism also has social impacts and possible environmental risks.

If these issues are not addressed, we may see some impact on the visitor experience.

The Government has initiated a range of measures to address these pressures, including ‘Project Palace’ to accelerate new private sector investment in New Zealand’s hotel infrastructure.

The project shows an additional 26 hotels will be needed over the next 10 years to meet expected tourism demand in our major tourist centres.

In Budget 2016, the Regional Mid-Sized Tourist Facilities Grant Fund was established to help alleviate some of the more immediate pressures on infrastructure.

The first round of funding attracted a great response and the fund was oversubscribed. The Government has committed further funding and a second round is likely to be announced very shortly. 

In addition to infrastructure, the tourism sector also requires great people. A skilled and committed workforce is at the heart of a great visitor experience, and with the right staff, businesses can flourish and grow.

Getting more New Zealanders into tourism and hospitality jobs is something I’m very passionate about. A job in the hospitality industry can be a great training ground for young people, with opportunities to progress within the industry or by using those skills in the wider tourism sector.

Jobs in tourism can also be fantastic for older people — we see that already with lots of our tourism operators starting businesses later in life — and loving the experience! It’s really important that we as New Zealanders share our stories with visitors and see tourism as a great career.

Ensuring the availability of skilled people is a priority for the Government.

We’re working in close partnership with Hospitality New Zealand and Tourism Industry Aotearoa to commission more detailed research into the movement of people in and out of the tourism industry, with particular focus on education and training.

We want to understand the types of qualifications people are attaining before they enter the industry, and the usefulness of those qualifications while they’re working.

This research will provide some key insights into these issues and inform future work on where Government and the tourism industry should focus efforts to attract and retain great staff.

Challenge 3: Ensuring all regions benefit

As I mentioned, the third key challenge is how to make sure all regions throughout New Zealand are benefiting from increased visitor numbers.

We want all regions to realise their tourism potential and reap the benefits for local businesses and communities.

The Government recently introduced a new ‘Regional Stream’ to the Tourism Growth Partnership, which prioritises funding for initiatives outside the main centres.

In the Marlborough region, the TGP has supported the Omaka Aviation Heritage Centre by providing $1.5 million for the expansion of its facilities and launch of a new exhibition featuring aircrafts and locations from World War Two.

The Kaikoura earthquake caused severe damage, especially for the upper South Island. The closure of State Highway 1 and the damage to infrastructure is undoubtedly having an impact on the tourism sector.

The Government is committed to assisting the people of Kaikoura and the top of the South Island through the difficult recovery process.

Last week, Tourism Minister Paula Bennett announced an $870,000 support package to help promote tourism in Kaikoura and other upper South Island districts impacted by the quake.

Of the $870,000 funding, $150,000 will be dedicated to helping reduce the impact of the State Highway’s closure by promoting the Marlborough region as a destination for domestic visitors.

$70,000 will be made available to promote common Top of the South touring routes — which have changed since the quake — to the international travel trade.

The Government will continue to support this region and keep a close eye on its recovery.

Conclusion

The tourism sector is heading for continued growth and is well positioned to reap the rewards.

While the success of the sector has raised some challenges, the Government will continue working with the tourism industry to address these concerns.

Attracting the visitors we want, making sure the sector has what it needs to deliver a great visitor experience, and enabling all regions to benefit will mean the sector is able to make an even bigger contribution in the future — benefiting all New Zealanders.

Thank you for having me here today and I wish you the best for the rest of the conference.