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Three Goals for Tourism

An Address by

Hon Lockwood Smith PhD
Minister of Tourism

Three Goals for Tourism

Auckland Chamber of Commerce
Carlton Hotel
18 June 999
8.30 am


When I was appointed Minister of Tourism around two months ago, I never claimed to have an extensive background in the industry.

When I had the time to travel I didn't have the money.

Now all I see are hotel rooms, ministers' offices and conference centres.

But I had done some tourism-related work when overseas for my trade portfolio.

And there are important synergies between trade and tourism that the Prime Minister recognised when she appointed me.

Essentially, I see my combined portfolios as about maximising our foreign exchange earnings.

With the balance of payments deficit the way it is, we have a lot of hard work ahead of us - especially seeing New Zealanders appear to be feeling wealthier and more confident and consequently spending more on imports.

Professionally, I try to be an agnostic when it comes to different foreign exchange earning industries.

My job means that I shouldn't favour those who earn our foreign exchange from marketing butter or boats, wool or wine, machines or meat, holidays or software, education courses or rugby sponsorship deals.

But I'm sometimes accused of being a little biased towards the dairy industry.

I am a great admirer of it.

Well, in the year to June 1998, our dairy industry earned us around $3.7 billion in foreign exchange.

Our meat industry earned us a little under $3 billion.

From manufacturing, we earned around $2.3 billion.

And from forestry, we earned around $2.2 billion.

For tourism, it was $4.4 billion.

The truth is I am a little biased towards the dairy industry, having worked for its board, but I put tourism right up with it in importance, or even ahead.

It's our major foreign exchange earner.

And tourism is another New Zealand industry that has successfully navigated it's way through the Asian Economic Crisis.

Last year, despite the crisis, arrivals fell by under one and a half percent.

More importantly, expenditure by visitors in the year to March increased a very creditable 18%.

In the wake of the crisis, the industry successfully switched gear to increase its focus on Australia, the US and the UK.

And despite a drop in arrivals from Japan, expenditure from that market increased.

I don't believe in picking winners, but tourism has picked itself.

Looking ahead, the industry and the board are seeking substantial further growth.

As minister, it's my privilege to help in that process in whatever way the industry believes valuable.

I believe it would be useful for the industry to set an overall objective for earnings.

How much it believes it can grow - with maximum energy applied - by a particular year.

I don't want to prejudge the setting of that objective, so purely for sake of argument, imagine if we could double our tourism earnings.

Such a goal would be highly ambitious, perhaps to the extent that the industry may see it as unrealistic.

But I would point out that since 1994, the industry has doubled its foreign exchange earnings from $2.2 billion to that $4.4 billion figure I mentioned.

Doubling would mean tourism would be earning $9 billion a year.

It'd mean a total of around 150,000 tourism-related jobs.

Our total tax take would go up $1.6 billion - which in turn could be used partly for tax cuts and partly for health, education and the police.

Tourism would be contributing an additional $4.6 billion to our GDP.

These are huge numbers.

I've established three key goals as Tourism Minister to take us towards them.

1. A sustainable flow of tourism earnings

2. Removing barriers for tourists

3. Removing barriers for the industry

I want to take you through these three key goals today.

By a sustainable flow of tourism earnings, I mean simply that we don't want to be attracting tourists just through the summer months, or through the ski season, as examples.

And we don't want to do well only in one year.

We need a sustainable flow of tourists throughout the year, every year.

That's the goal of the new campaign.

It's unfortunate that, for various reasons, the campaign has been characterised - really caricatured - as all about attracting tourists to APEC, the America's Cup and the new Millennium.

It may have suited some people for political reasons to set up that straw man, but the campaign was never about that at all.

Even if APEC were even to be considered a tourist event - and for the life of me I can't see how anyone could think that - not one more tourist is going to be able to come to Auckland at the time of the Leaders' Meeting in September because every hotel room has been booked.

And if you haven't already booked a place on a boat to view the America's Cup proper, then I expect you'll have to consider the black market.

And the Millennium happens everywhere in the world. There is an obvious limit to the number of people who can travel to where the sun rises first, the Chathams or Gisborne.

The campaign has never been about crudely trying to attract tourists to these events.

It has always been about the long-term future of the industry.

In the past, our tourism promotions have largely been focussed on particular products.

Our tourism board supplied information to offshore wholesalers who then did promotional work with retailers and potential visitors in their markets.

That meant our image in offshore markets could be no greater than the sum of its parts - the individual products.

Our new approach is designed to increase demand to travel to New Zealand by presenting an overall image of New Zealand.

The campaign is research-based.

All our promotions will be aligned with what we've learned about people's motivations to travel.

Its goal is to position New Zealand in the minds of consumers as meeting their values for a great holiday.

We first have to gain their interest.

We're going to do that through advertising, and promotional and public relations activities.

And those activities are going to direct them towards more specific information - and easy opportunities to purchase holidays.

That will be done using the new Internet site, and by other activities such as training travel agencies in our markets.

What, then, is the role of the mega-events?

The answer is that New Zealand is too small to be able to afford the extent of advertising that would be necessary to attract consumers from scratch.

A thirty second advertising slot during the US final of Seinfeld cost over seven million New Zealand dollars.

I would say to even raise awareness about New Zealand - let alone get some of our messages across - we'd be looking at at least $100 million of advertising in the US alone.

At least.

A small country such as New Zealand can't afford that. We have to be more innovative.

With APEC, the America's Cup and the Millennium, awareness of New Zealand will be raised, hopefully along with interest.

We're going to leverage off that to make our advertising dollar go further.

It's that leveraging that means we have a once-in-a-generation opportunity to reach our audience and deliver our messages for only around $40 million.

It's unfortunate some have chosen to attack the New Zealand tourism campaign to help their political campaigns, because we will never have such an opportunity again.

While the America's Cup will hopefully become a standard Auckland event every four years, Aucklanders will be pleased to learn New Zealand won't be chairing APEC for another 21 years, and the Millennium is rarer still.

The campaign is central to achieving my goal of a sustainable flow of tourism earnings - it's a-once-in-a-generation opportunity to raise our profile as a tourism destination.

My second key goal as Tourism Minister is to remove barriers for tourists.

Again, it's a self-explanatory goal: we want to make it easier for tourists to get to what is the most isolated country on Earth.

China has helped us in the last year by declaring New Zealand an approved destination, but sometimes we ourselves put barriers in the place of potential tourists coming to New Zealand.

The best example I'm personally aware of concerns the United Arab Emirates.

A very, very wealthy region.

So wealthy that I can't really see we have much risk of its people coming here as tourists, over-staying and winding up on the dole.

Despite that, we put barriers in their way if they wanted to have a week in Queenstown in the middle of their summer.

First, we had no air services agreement with the UAE so Emirates Air wasn't allowed to fly to New Zealand, and Air New Zealand wasn't allowed to fly to the UAE.

We've since sorted that out.

But, more importantly, people from the UAE needed visas to have their week in Queenstown.

To get those visas, they had to send their visas to another country's embassy, in this case the British.

And of course the process took weeks, rather than days or hours.

We've now made the UAE visa free, but potential tourists from the two most populous countries on Earth - China and India - still need visas to visit New Zealand as do people from many other countries which could offer potential to the tourism industry.

Now, I'm not suggesting that we give the whole world visa free access to New Zealand.

In many cases there are risks of people over-staying.

Other times, there are security intelligence issues to consider.

They can mean that the Government requires a country's citizens to obtain visas even if we can't always tell you why.

But we do need to ensure that if we are going to require visas we have good reasons for it.

And we should at least make the procedures for applying for them simple, easy and fast.

While no visas are required for tourists from our four major markets of Australia, the UK, the US and Japan - and 90% of tourists arriving have visa free status - I want to ensure we're not missing out on opportunities because of unnecessary rules and regulations.

The Government currently has the Ministry of Foreign Affairs and Trade leading a study on the common sense of visa requirements for different countries, and on ways we can improve our processes if we're satisfied visas are still needed.

We're also, of course, working flat out to secure as many air services agreements as possible.

We have agreements with all our top 20 tourism markets.

In the last year, we've made particularly good progress in Europe with agreements with Switzerland, Sweden, Denmark, Norway, Austria, Ireland, Belgium and the Netherlands.

Global airline alliances will also help to undermine all the old restrictions.

Australia, of course, remains a problem.

Emirates Air, for example, would probably want to fly through Australia to get to New Zealand.

The "beyond rights" issue stops it.

To me this is one of three or four blots on our relationship with Australia.

There are starting to be some positive signs coming out of Canberra, but - as always with international diplomacy - don't expect progress to be as fast as you or I would like.

Another forum we're using to remove barriers for tourists is the APEC Tourism Working Group.

We're chairing it, of course, this year.

It has already identified regulatory impediments to regional tourism.

The challenge now is to remove them.

I'm scheduled to be going to Seoul for an APEC Tourism Ministers' Meeting next year where we will develop a plan of action for our officials to do just that.

My third and final key goal as Tourism Minister is to remove barriers for the industry.

This fits in well with my work as Associate Minister of Finance, and it certainly doesn't involve only the tourism industry.

The RMA. OSH. ACC. Compliance costs.

I hadn't been Tourism Minister for long before hearing exactly the same from the tourism industry as from most other industries in New Zealand.

But there are some differences too.

Tourism is an industry largely dominated by small and medium sized operators.

I'm told there are 16,000 small and medium sized operators employing the vast majority of the 118,000 people employed directly or indirectly in the industry.

Compliance cost issues cut smaller operators more keenly.

I'm trusting that the ACC reforms will help improve the industry's plight from the beginning of next month.

And the Government will continue to sort out other issues.

With the RMA, there is also a slight difference between the tourism industry and some others.

Many of the horror stories we hear about it concern the tourism industry.

But the industry also recognises more than most the importance of our clean, green image - the image that the act is supposedly protecting.

RMA reform is not about downgrading our environmental standards.

I think there probably are some cases where local councils are a little precious about a particular resource, but I'm sure there are plenty of others where arguments could be made that we should upgrade our environmental standards.

It is a question not so much about environmental standards, but about procedures.

No one in the tourism industry wants to see a flash resort on every beach.

What is wanted are procedures which are simple, cheap and quick to tell you whether you can do what you want to do, and under what conditions.

That's what the Minister for the Environment is looking at.

I'm told the industry was generally satisfied with his recent proposals to improve the operation of the act.

It's important the industry lets me know if it has concerns about specific regulations.

While I know delays under MMP frustrate people, the Government is sorting out these problems, and we'll sort out others that you bring to our attention.

My three key goals represent the three best ways I believe I can help the tourism industry.

I'm still new to the portfolio.

I still have more to learn.

But the industry will find me a willing student.

I want it to set its overall objective.

And I'm determined to work hard with the industry to achieve it.

It's already our biggest foreign exchange earner and I believe it can have an extraordinary future ahead of it.

END

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