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Opinion: Tourism industry may need rethink as growth pauses

by Simon Louisson of NZPA

Friday 16th June 2006

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It's where some 400 tourist operators, big and small, show off their offerings to around 350 international buyers. These days, the fair generates around $2 billion of business -- around a quarter of the foreign exchange the industry generates.

Although that's a huge amount of money, tourism industry leaders at the conference warned the tighter times of 1.5% growth last year were likely to prevail for at least another year.

"The heydays of double digit growth are over," Tourism Industry Association chief executive Fiona Luhrs told around 100 foreign and local media attending the conference.

"The market is relatively soft," she said.

This is bad news for the economy, not just the industry. Three years ago, tourism overtook the dairy industry as the country's top foreign-exchange earner.

Tourism Minister Damien O'Connor told journalists it directly and indirectly employed one in 10 New Zealanders and produced 10 percent of gross domestic product.

The effects of the kiwi dollar's sharp fall this year had yet to flow into the industry, where products are priced a year or more in advance. But it had certainly helped.

John Rankin, who runs a British firm specialising in travel to New Zealand, said he was "personally delighted your New Zealand dollar is taking a battering. It hugely helps".

Tourism New Zealand chief executive George Hickton said more intense competition was coming from states such as Chile, Namibia, and Macau, which are in similar markets.

The proliferation of budget airlines in Europe had encouraged more travel there and detracted from long haul destinations such as New Zealand.

The perceived "safety factor" that had helped New Zealand since September 11, 2001 was wearing off with Japanese tourists flocking back to the United States.

Michael McClelland, an US buyer who runs The Best of New Zealand Fly Fishing, believes the growth slowdown was not due to doing things badly.

"A few years ago, the stars were lined up perfectly," he said, citing the attractive exchange rate, the post 9/11 safe haven factor, and New Zealand being seen as a fashionably "hot" destination, fuelled by publicity surrounding The Lord of Rings (LOTR) film trilogy.

Now, it was more expensive, the LOTR factor was wearing off and Americans were travelling in Europe again.

"Unfortunately, Americans have short memories," he said.

New Zealand-born Mr Rankin said there was however no fall-off in British interest, with tourists from there coming in ever-greater numbers.

LOTR had been a massive free advertisement which still generated strong interest.

"In the UK, there is a strong desire to visit the colonies," he said.

Henry van Asch, co-founder of bungy jump company AJ Hackett Bungy, said a pause in tourism growth could be healthy.

A lot of "me-too" operators had opened, who were threatening the authenticity of the New Zealand "product". That had seen price wars develop, forcing down the quality of the offering.

"We want more people in the industry but we want them to maintain the quality," Mr van Asch said.

Prime Minister Helen Clark told the conference that six years ago, when a New Zealand tourism strategy was drawn up, a key plank was to go for yield over numbers. She exhorted the industry the industry to pull together in a New Zealand-incorporated approach.

Travel writer Darroch Donald, who had just completed writing the fourth edition of travel guide Footprint New Zealand, said he had been impressed with the quality of tourism products in his extensive travels while preparing the guide.

He was also impressed by the products on display at Trenz.

New Zealand had been lucky, but interest had passed its peak.

"Nobody should be surprised that there has been a levelling out, a plateauing of tourism to New Zealand."

He said New Zealand was inherently lucky in its small population, geography and the natural environment.

"That will hopefully continue to attract people here, but I think it has been exceptionally lucky in the safety aspect 9/11 created and also Lord of the Rings."

Competition from other countries had increased because Internet technology had allowing less developed countries such as Namibia, to advertise themselves more effectively.

New Zealand's top selling position in Footprint guides had been overtaken by South Africa, Namibia, and Vietnam.

Donald said New Zealand was doing an excellent job in activity and eco-tourism, and it needed to brand that as much as it could, so long as operators were genuine.

He cited Milford Sound as an example of poor execution.

"Milford is such an incredibly stunning looking place and yet the waterfront is shocking."

The Department of Conservation had to get together with commercial operators and hammer out a solution.

New Zealand could look at the United State national park system where vast numbers of tourists visited but damage was minimised.

"I can see Fiordland and other national parks getting to the stage where everybody bar New Zealand residents have to pay an entry fee. That, I think, is a good thing, as long as that money is turfed back into conserving the park and not commercial pockets."

Donald saw tremendous challenges for New Zealand in maintaining the 100 percent pure and eco-image as tourism scaled up. Tourism operators were moving away from catering for the free individual traveller and moving into mass market tourism.

"It does worry me -- particularly with the increasing numbers from China and India, the mass markets, the way those masses are ferried around the country -- that it will become far more commercial and damage the very thing that makes New Zealand great."

van Asch said the Government's move to deregulate broadband access on Telecom's network should help that important technology getting to tourism operators who often worked from remote areas.

Luhrs last month attacked the Government for giving "virtually nothing for one of the leading industries driving economic development".

German-born head executive director of Kea Campers Michael Becker, said the Tourism New Zealand decision to cut its German office had led to a fall-off in tourists from Germany and its neighbours.

He believed that decision should and would be reversed.

Donald suggested the growth slowdown should be regarded as "cup of tea" that would allow a welcome industry review.

"I think it is maybe a good thing, because had it continued, mistakes would almost inevitably be made.

"Whether New Zealand can afford for it go backwards is the issue. With one out ten New Zealanders employed in the industry, all it takes is another 9/11, or bird flu, and the country has massive problems.

"I think they have to brace themselves for things being not quite so rosy as they have been in the last five years."

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