Hon Todd McClay
Associate Minister of Tourism

5 June 2014

Address to Hotel Industry Conference

Thank you for inviting me to speak to you today.

Firstly I just want to acknowledge TIA Chairman Grant Lilly, Terry Ngan and Stephen Hamilton from Horwath HTL, and Garth Simmons from Accor.

I was pleased to accept the role as Associate Minister of Tourism when the Prime Minister gave it to me earlier this year. As MP for Rotorua, I have long been aware of the major role that tourism plays in the New Zealand economy. It is this Government’s ambition that tourism can make an even stronger contribution to New Zealand’s economic performance.

Hotels are a critical part of the tourism infrastructure. Hotels constitute over a third of all guest nights in New Zealand and international visitors staying in hotels spend more per night than visitors staying in other forms of accommodation. Hotels will therefore play a vital role in the sector’s overall strategy to lift the value from international visitors.

Outlook

So far in 2014 we are seeing a continuance of the positive trends from last year, which is great news for tourism businesses. There were 2.75 million visitor arrivals to New Zealand in the March 2014 year, which was five per cent higher than in the March 2013 year. This included growth from Australia (up 4.3 per cent), Asia (up 8.8 per cent), Europe (up 5.8 per cent) and the Americas (up 8 per cent).

This growth in arrivals is being translated into expenditure. For the year ending March 2014, international visitors contributed nearly $7 billion to the New Zealand economy, a 9 per cent growth on the previous year. This growth was driven primarily by holiday visitors, whose expenditure grew by 18 per cent.

We are also seeing a revival from some of our more traditional western markets, sparked by the release of the second Hobbit movie and the recent Royal visit. Visitors from the USA grew by 10 per cent during the year to March, spending a total of $727 million while in New Zealand. Up 55 per cent on a year ago!

The March visitor arrival figures also confirmed Germany is now New Zealand’s fifth largest visitor market with a total of nearly 75 000 arrivals the highest ever recorded for a 12 month period.

The Chinese market, as you know, is on a growth trajectory. Encouragingly, we are also seeing significant changes in travel choices of the visitors from China, particularly since the introduction of the new Chinese tourism law banning the sale of below-cost tours.

More Chinese visitors are now opting for independent travel options or higher-quality tours.

Between December 2010 and March 2014, there has been a 200 per cent increase in the number of general visitor visas issued by Immigration New Zealand branches in China.

On the back of the Government’s investment of $158 million in Budget 2013, Tourism New Zealand is broadening its focus to include emerging growth markets like India, Indonesia and Brazil.

But traditional markets remain important, that is why we will continue to leverage assets like the Hobbit, and upcoming events including the 2015 FIFA Under-20 and the Cricket World Cup.

There are still some challenges, particularly for the Canterbury region. However, those in Canterbury are doing a great job on the promotion of the region and reminding visitors that Christchurch is still the gateway to the South Island.

High value visitor focus and marketing

This Government is doing its part to support the tourism sector grow its contribution to the New Zealand economy by ensuring tourism has the right environment to support growth, we are putting New Zealand’s best foot forward on the world stage and helping the sector address challenges and opportunities.

As I mentioned earlier, in last year’s Budget, the Government invested an additional $158 million over four years to focus on growing high value tourism. This included targeted marketing, supportive visitor facilitation services and growth partnerships with the private sector to meet the needs of high value visitors.

We are starting to see the results of this investment:

Tourism New Zealand have been working hard to attract more higher spending visitors to New Zealand from existing key markets, and those from markets with strong growth potential, such as India, Indonesia and South America.
Tourism New Zealand has also strengthened its focus on special interest visitors. This includes walking and hiking, cycling, golf, fishing and skiing, with targeted campaigns developed for all these activities. These people generally spend more and stay longer.
At TRENZ recently, the Prime Minister announced the Government is investing $3.84 million in six projects to grow the tourism sector as part of the Tourism Growth Partnership:
The $3.84 million is in addition to $23 million in co-funding from the applicants, giving a total of $26.8 million of new investment in the tourism industry. This represents a six to one investment ratio and shows the confidence of our tourism sector.
Investing in a wide range of innovative tourism projects will help the New Zealand tourism industry as a whole – and create jobs in New Zealand.

But there is still more we can do.

Convention centres and major events

All of New Zealand benefits from the hosting of business conventions and major events here. As well as boosting tourism expenditure, the international travellers to the conferences and events bring with them new ideas to share with New Zealanders, they see opportunities for investing in New Zealand, and they help spread news of New Zealand’s reputation.

Currently New Zealand is missing out on a significant segment of the high value visitor market – large international business conferences and conventions, because we lack international-standard convention centres and also New Zealand, in recent years, has not been actively marketed as a business events destination.

To tackle these issues, last year this government announced an additional $34 million boost to TNZ to attract high value international business events including conferences, conventions and exhibitions.

The Government is also facilitating the development of international-standard convention centres in Auckland, Christchurch and Queenstown:

Work is progressing on the design phase for the New Zealand International Convention Centre in Auckland in line with the Crown’s agreement with SkyCity. It is expected that the consenting process will start later this year.
The Christchurch Central Development Unit is currently going through a Request for Proposal process for the development of a convention centre precinct in Christchurch and working towards a 2017 opening date.
In Queenstown, the Council will decide on 27 June whether or not to proceed with its proposal for a convention centre. At this stage they are working towards a 2016 opening date.

Wellington City Council has also recently announced their plans for a convention centre too.

The long-standing Tourism New Zealand conference assistance programme is on target to meet its goal of assisting 35 conference bids this financial year. The 28 bids assisted to date have a combined estimated economic impact of $55 million.

The programme is proving very successful – of the 9 conferences where the venue has been decided, NZ has won 6 of them. The total value of those 6 conferences secured is estimated to be worth $NZ10.5m to the New Zealand economy.

Tourism New Zealand has also had success in attracting incentive groups to New Zealand - around 50 groups have been attracted so far this year from across Asia and North America. An example of a recent win is an 800-strong group from Thailand that will visit for 10 days in September.

2015 will see some major events coming to our shores bringing significant numbers of international visitors:

In February and March, we will co-host the ICC Cricket World Cup with Australia. New Zealand is hosting 23 games in seven cities, including Auckland, Christchurch, Dunedin, Hamilton, Napier, Nelson and Wellington.
On 30 May 2015, the FIFA under-20 football world cup will officially kick off with games in Auckland, Wellington and Whangarei. The FIFA under-20 World Cup features 24 nations from across the world and will last 22 days.

The Ministry of Business, Innovation and Employment is currently looking at how better to measure the economic benefits of holding international conferences and major events here. A focus of this work will be to investigate the broader benefits from these events such as promoting business investment opportunities and the sharing of new ideas.

Tourism 2025

It was very positive to see industry getting together to produce the Tourism 2025 framework.

The framework identifies some huge opportunities for the sector, and making the most of these will be essential to delivering on the growth targets set out in Tourism 2025

Amongst those opportunities, a number are particularly relevant for the hotel sector:

High value Chinese visitors:

The impressive volume growth from the Chinese market is expected to continue, but we shouldn’t just be focused on volumes. Government’s strategy is to target the higher value visitor segments which have the potential to deliver far greater value to the NZ economy.
If we’re targeting high value visitors we need to deliver high value as well, which means tailoring our product to meet unique visitor needs – small conveniences and courtesy’s provided by accommodation providers can go a long way (for example basic Chinese signage, Chinese tea and Chinese speaking staff).
Government is supporting this through the China toolkit website and training provided by Tourism New Zealand - it is a resource to support businesses to understand Chinese visitor needs and how they can cater to them.

Christchurch:

Whilst visitor numbers are recovering, accommodation capacity will be an issue for some time for Christchurch as a gateway to the South Island.
Attracting investment in accommodation and other key tourism infrastructure, and ensuring that tourism’s needs are considered in the rebuild plan is key – something government is contributing to through the Canterbury Tourism Partnership.

Conclusion

There is a lot to be positive about. However, we cannot rest on our laurels. As a sector we need to continually innovate and grow.

Thank you for your time, enjoy the conference and best of luck for the year ahead.

ends

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