Tourism firms on a roll

By Peter V O'Brien

Friday 7th March 2003

Solid growth in inbound visitor numbers last year was reflected in the earnings of the broadly defined tourism sector in its latest reports.

Internal reorganisation in some companies assisted profit growth and helped the listed groups' share price performance.

Price movements since The National Business Review's consideration of the sector in September are in the table. They are deceptive, because much bigger gains were made in the 12 months since March 2002, with the exception of Tourism Holdings where there was no change.

Year-on-year movements were: Air New Zealand, +52.9%; NZ Experience, +58.3%; Shotover Jet, +58.3%; Tourism Holdings, nil; and Sky City, +46.8%

Visitor numbers in the year ended December increased 7.1% but there was another significant increase in January and in the year ended January. Figures released on Monday showed an 8% gain for the month of January and 8% also for the year ended January.

Post-September 11 events and generally higher numbers of visitors in January than in most other months probably explained the apparent discrepancy between the 7.1% and 8%.

Company reports concentrated on visitors from overseas when talking about tourism activities, an understandable position given the numbers are now more than two million a year.

Auckland International Airport recorded a 9.8% increase in international passenger numbers to 2.57 million over the corresponding period of the previous year. That figure excluded transit and transfer passengers.

The company said domestic passenger movements were 11.2% up at 1.98 million, "largely driven by the flow-on effect of the increase in international passengers and increases in the last few months of the period as a result of the introduction by Air New Zealand of the lower cost Express Class service on domestic routes ... "

Air New Zealand benefited from those passenger movements.

Arguments that the loss of the America's Cup will affect tourism are silly. The value of the Cup to the country's tourism and general GDP was less than 1% in each case in the most liberal economic assessments.

War potential in the volatile Middle East, leading to fear of international travel, and a strengthening New Zealand dollar are more important potential influences on tourism than the Cup's loss. Those influences could be short term.

Investors should (but rarely do) take a long-term view. The leading issues are pressure on current infrastructure and the industry's capacity to create more infrastructure.

In the meantime the tourism companies are on a roll.

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