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Mark Burton Speech: Inbound Tour Operators

Quality now and for the future: Speech to Inbound Tour Operators Council of New Zealand (ITOC) Conference

Good morning ladies and gentlemen. It is a pleasure to be speaking at your conference here today in Napier—the City by the Sea—and I thank you for inviting me to officiate once again this year.

Napier is a place that embodies the real spirit of New Zealand tourism – our culture, outdoor activities, and genuine kiwi hospitality—all set against one of the most stunning landscapes in the world. What a spectacular host location for this ITOC conference.

And what impeccable timing! Just two weeks ago, I had the very great pleasure of officially confirming tourism’s status as New Zealand’s number one export earner. The latest Tourism Satellite Account showed total tourism spending of over $16 billion, comprising 9.6 per cent of New Zealand’s GDP. The $7.4 billion expended by our international visitors adds up to nearly 18 per cent of New Zealand’s total exports.

And, visitor spend is growing faster than visitor numbers. The sector supports an estimated 172,000 jobs—one job in every ten. By any measure, tourism truly is an economic powerhouse.

Not to put too fine a point on it but, right now, the sector is going so well that even my Parliamentary colleagues are getting tired of hearing good news from me!

As you well know, the sector faced some major worldwide challenges last year, including SARS, global conflict, and terrorism. At home, New Zealand was also dealing with some significant changes to our exchange rate. But 2003 was the year that we emerged as an international success story. Very few nations will have seen positive growth in either visitor numbers or expenditure in 2003. We achieved both.

Our successful, multi-award winning 100% Pure New Zealand campaign has been widely recognised as a world leader by the international tourism sector. Recently, I was delighted to receive a number of awards for the campaign, on behalf of Tourism New Zealand, at the Pacific Asia Travel Association conference, including the Grand Award for Marketing.

Another outstanding success for Tourism New Zealand and “New Zealand Inc” was the Ora -Garden of Wellbeing, which took gold at this year’s Chelsea Flower Show in London—an event which has been dubbed “the Olympics of gardening.”

Leveraging off events such as this is a tremendously effective way to target our key markets. We are continuing our innovative leverage marketing through Tourism New Zealand, just as we did with The Lord of the Rings trilogy and Whale Rider.

Indications are that Australia is now taking a leaf out of our book, with their new tourism strategies echoing those that we have pursued so effectively over the past four and a half years. But imitation is the sincerest form of flattery, and I wish them well with their new campaign. It takes hard work, dedication, a willingness to know what you do best (coupled with an unwillingness to compromise it), and a real passion for excellence to get your message heard over the deafening noise of the international tourism market. And, as we have learned—the message must “ring true” with target visitors—it must be authentic.

But New Zealand’s recent successes on the world stage do not entitle us to become complacent—ever. On the contrary, we must continue to work hard to retain our hard-won international reputation. And, while we will never be able to match the spending power of countries who are many times our size, we do have one invaluable advantage—that indefinable kiwi edge. (Something we proved again just recently on the netball court...)

Kiwis know that enterprise does indeed breed success. And, as inbound tour operators, you are directly responsible for 50 per cent of all visitor arrivals. You can be proud of the vital role that you have played in our industry’s success.

Combined with Tourism New Zealand’s innovative marketing, your work is integral to tourism’s value as a premiere industry. All projections point to a healthy growth in value over the coming years.

In the year ending May 2004, New Zealand received 2.2 million international visitors—a new high in visitor arrivals, and up 8.5 per cent from last year. This is, by any measure, exceptional growth. The latest forecast figures predict an increase in international visitor arrivals of almost 6 per cent annually to 2009.

But even more important is the forecast international visitor spend, predicted to increase at nearly 10 per cent per annum, reaching $11.7 billion by 2009. But what do these numbers really mean? I think comparisons with other major industries really help to illustrate just how significant tourism really is, so let me put them in perspective for you.

Without international visitors, New Zealand would have to double the size of our dairy herd (that’s 4.5 million dairy cows), more than double our production forest (an extra 5.3 million hectares), increase the size of the kiwifruit industry 12 times over, or the wine industry 23 times over.

(Well, maybe the last one’s not such a bad idea…)

These comparisons really reinforce tourism’s standing as the premiere industry of New Zealand.

We do indeed have a lot to celebrate. The New Zealand economy as a whole has a lot to celebrate. This government has made growth and innovation in the economy a key focus and tourism is just one sector that, through working in effective partnerships, has benefited.

Since taking up the tourism portfolio, I consider myself privileged to have been a part of a fundamental shift in the New Zealand tourism mindset.

When I became Minister of Tourism over four and a half years ago, there was no recent history of partnerships between government and the industry.

We worked closely with key industry stakeholders to develop the New Zealand Tourism Strategy 2010, which outlines practical steps towards building a truly sustainable tourism market—one that strikes a balance between managing the impacts of tourism on the environments of our unique nation, and reaping its potential economic benefits.

We have consistently worked closely with the sector to resource and improve quality standards at every level.

Today, the industry is underpinned by strong government/sector partnerships that have survived and strengthened through prosperity and challenges alike. And we continue to work with you, to find more and better ways to build the sector’s long-term, sustainable future.

And here, I want to pay a special tribute to the leadership of ITOC—Chief Executive Peter Lowry, President Stuart Neels, and recent President Don Gunn. They have been prominent among the key sector leaders with whom I have been able to work in advancing our common goals as expressed in the Tourism Strategy.

Where we used to see and sell ourselves solely as a scenic destination, we have come to realise that, as spectacular as the scenery is, promoting ourselves on scenery alone undersells the depth and variety of experiences New Zealand really has to offer. More and more, the spectacular landscapes and environments which used to define New Zealand are becoming the backdrop for an ever-increasing range of sophisticated tourism products, aimed at an ever more sophisticated kind of guests.

We call them Interactive Travellers—New Zealand’s ideal visitors. Well educated, travelling internationally on a regular basis, and quite often sporting a relatively high level of discretionary income, these guests are looking for unique, authentic experiences that involve real interaction with both people and environments.

Interactive travelers are exceptionally valuable to New Zealand: spending more, getting out into the outlying regions, and as keen as we are to interact with and protect the very environments and heritage that have drawn them here.

Today, around the regions of New Zealand, these guests can choose from world-class food and wine, a wide range of quality accommodation, adventure tourism, wildlife, skiing, and unique cultural events.

We are committed to growing this high-value, high-yield market. And through the award winning 100% Pure campaign, and of course your distribution channels, we are seeing real success.

So yes, we are now number one and proud of our achievements, but as I said before, we cannot afford to sit back and rest on our laurels. And I don’t believe for a moment that the industry as a whole is at any risk of doing that.

Today, we all know that quality is at the heart of a sustainable tourism industry. Visitors who go home with good memories share those memories with their family and friends. This generates an ever increasing “buzz” about New Zealand, in turn attracting more of the kind of visitors we want. The benefits speak for themselves – happy guests not only contribute to the sustainability of our tourism sector as a whole—they increase the profitability of your own businesses.

Qualmark is an excellent example of the strong government/ industry relationships we have built over the past several years and a real example of how Strategy 2010 has resulted in everyday benefits to tourism businesses.

The Strategy was created to provide direction for tourism on a national level and has been fundamental in helping me to secure extra funding for the sector.

The Strategy was created through consultation and agreement between government and industry stakeholders—something you would well know from your Council’s excellent work as members of the Tourism Strategy Consultation Group. As a result, it stands up under scrutiny and its emphasis on quality provided the rationale for increased funding for Qualmark.

Qualmark is a world leading licensing system—the only quality assurance system that can cater for a wide range of tourism businesses. It has expanded beyond its original brief of accommodation assessment and is now available across the product spectrum: adventure activities, cultural and nature experiences to rental car companies, bus and coach operators, museums, tours, retail, cafes, and more. Over the past two years government has fostered the development of Qualmark through $2.5 million worth of additional funding, and I recently announced further funding of $500,000 to Qualmark to promote the quality message.

As strong supporters of Qualmark, I’m sure you will be interested in the latest Qualmark development – the new “Exclusive” accommodation category, which I announced at TRENZ in May. Exclusive status is for establishments at the high end of New Zealand’s accommodation market, fitting well with New Zealand’s increasing focus on sophisticated niche tourism and clearly illustrating the sector’s ongoing commitment to quality.

Your Council has shown strong leadership in quality by adopting the new membership and financial best practice criteria. I understand that you have been working closely with Tourism New Zealand, and that the ITOC China market portfolio group has embraced the new criteria and all members have now been assessed.

The next challenge will be to apply the new membership and financial criteria to all ITOC full members, which I understand will occur this year. This is a major step forward in establishing quality standards. I applaud your moves to base ITOC membership on quality performance, products, service, and business practices. I want to commend you on your commitment and on the long-term perspective you have taken on this issue.

I also congratulate you on the work you have undertaken with the New Zealand Hotel Council. I understand that you are very close to agreeing on best practice standards across a range of issues: payment of accounts, preferential rates, and of course, yield management.

I cannot stress enough the importance of good yield management to the industry. As inbound tour operators, you are in a key position to influence yield. Getting the best out of any business sometimes means asking some pretty hard questions.

It may mean taking a hard look at current practices and finding new ways to do business. New Zealand will never be the cheapest destination in the world, and why would we want it to be? In order to reinvest in our products and industry, we must price accordingly.

Our goal is to offer innovative, high quality products and services that live up to New Zealand’s reputation as a premiere destination. If we are going to deliver this, we must have a sufficient return on investment, and sufficient ongoing reinvestment in our people, our products, and our infrastructure. We must continue to work together to maximise the economic benefits of tourism, while still protecting the people, cultures, and environments that we treasure, and which bring our guests here in the first place.

I understand that your Council is also in discussions with Qualmark investigating the desirability of ITOC full and allied members using suppliers carrying the Qualmark. A Qualmark rating provides both tour operators and travellers with the security and assurance of a world-class experience. Such a move demonstrates your long-term outlook, foresight, and commitment to the industry.

Before I finish today, I’d like to briefly outline some of the proactive work that the government is currently undertaking.

The first is a three-year study into tourism infrastructure. Using Tourism Research Council forecasting data, the Ministry of Tourism is currently investigating where key infrastructure bottlenecks are likely to occur in the next seven years, including roads, airports, water, and wastewater networks. A key issue starting to arise for many communities is peaking numbers of visitors who need to use these assets. This project will allow us to identify those problem areas and coordinate appropriate action.

We are also working closely with the Department of Conservation on destination marketing as a way to manage visitor pressure. Our goal is to target guests who will stay longer, spend more, and, perhaps most importantly, get off the beaten track and out into the regions of New Zealand. We must also spread year round demand for NZ as a destination—something we have been focussing on since the release of Strategy 2010.

We have already made some gains in this area by successfully extending out the shoulder seasons, but we need to keep building on these changes and on our achievements so far. Since you drive 50 per cent of our visitor arrivals, inbound tour operators of course have a crucial role to play in influencing travel patterns.

The challenge I put to you is to think about how you might continue to address this issue of seasonality in an integrated and cohesive manner.

The benefits of smoothing seasonality are widespread for the sector, particularly in terms of better use infrastructure and the care and protection of our natural environments, where we are seeing a number of potential ‘hot spots’ starting to develop.

Another important issue (and one which inbound tour operators can positively influence) is regional spread. With over two million overseas guests per year and growing, some of our icon destinations are coming under increasing pressure. New Zealand has over 16,000 tourism businesses spread across the country, with a stunning array of choices on offer. The challenge for you—indeed, the challenge for us all—is to identify, develop, and market those quality products that will assist in smoothing out regional spread while at the same time increasing visitor yield.

And on that note, I would like to congratulate you once again on your commitment to the industry, and acknowledge the hard work done by inbound tour operators that has contributed significantly to making tourism New Zealand’s leading export earner.

I hope that you have time to enjoy some of the cultural experiences whilst you are here including the splendour of the Art Deco buildings; and the many vibrant cafes (and wineries!) Napier has to offer. You really deserve some time off!

I wish you all the best for a successful conference as we look forward to another prosperous year for tourism, New Zealand’s most exciting and valuable industry.

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