Tourism boom keeping Air NZ, Auckland Airport in clover

New Zealand's ongoing tourism boom is showing no sign of letting up and companies at the forefront such as Auckland International Airport and Air New Zealand are keen to keep riding the wave.

"The reality is that tourism has become our biggest industry," Air New Zealand chief executive Christopher Luxon told BusinessDesk. "It's 10 percent of our GDP, it's 12 percent our workforce, 17 percent of GST receipts and 21 percent of total export income. It's a really important industry for New Zealand and New Zealanders and all the country is involved in tourism in my view."

Auckland Airport CEO Adrian Littlewood told a conference call of investors that he remains confident in New Zealand's tourism prospects, with recent numbers indicating 120 million people in the world are actively considering a visit here. The airport, which is New Zealand's busiest gateway, recently embarked on a $1.9 billion infrastructure investment programme that includes a new runway by 2028 in order to cope with visitor growth.

Government figures show a record 1.9 million people arrived in New Zealand for holidays in the 12 months ended July 31. The number has almost doubled since 2002 when the number of holidaymakers reached 1 million for the first time.

Earlier this week, the Ministry of Business, Innovation and Employment forecast total international visitor arrivals will hit 4.9 million in 2023, led by Australian and Chinese visitors. Total international visitor expenditure is tipped to increase to $15.3 billion in 2023 from $10.3 billion in the year ended June 2017.

Against that backdrop, there have been some concerns about capacity constraints, in particular during peak season times.

Luxon said about 96 percent of surveyed visitors say they are satisfied or extremely satisfied with their time here. Air New Zealand is focusing on trying to smooth out the inflows so visitors are spread more evenly through the whole year and is also working hard with local authorities to build new regional tourist attractions.

"We want to make sure they get to all regions of New Zealand," he said. The MBIE stats show lion's share of the regional tourism spend was in Auckland in the year ended June 30, accounting for 29 percent of total spending (both domestic and international) while Christchurch, Queenstown, and Wellington each made up 8 percent.

Air New Zealand also wants to attract higher-value visitors.

"We want to have higher spending, wealthier tourists, consuming richer, more premium experiences, and making sure this is a high-value industry," he said. There's room to add another $9 billion in the sector. Tourism generated $34.7 billion in the year ended March, according to the latest data from MBIE.

Auckland Airport's Littlewood said the move into higher value is already starting to happen with a "shift in Chinese passengers with increasing numbers coming from the free and independent travel category rather than coming here on group tours."

"We are working hard on tier 3 and 4 Chinese cities," Littlewood said. "That market is seeing New Zealand as a destination, there has been a shift away from attractions and shopping based experiences to cultural or natural beauty which is a positive."

Luxon said the 1,600 new hotel rooms coming on stream in the near future and the government's $100 million tourism infrastructure fund - much of which will be used to build toilets and car parks and to bolster programmes at crowded visitor hotspots - along with the $76 million investment in the Department of Conservation, will help strengthen the sector.

"The upshot and potential for New Zealand are really quite exciting still," he said. "I am very optimistic about tourism and New Zealand has a lot of what the world wants."

(BusinessDesk)