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OPINION: Stop tourism dollar heading offshore

OPINION: Stop tourism dollar heading offshore

By: Michael Baines, Chief Executive, Motel Association of New Zealand

The tourism sector, like so many other industries, has been massively and profoundly affected by the growth of the Internet.

Just one aspect of this is the ability for someone on the other side of the world to make all their accommodation using an online booking provider. This is undoubtedly a boon when it comes to promoting Godzone to the world.

But this benefit comes with a cost, and it’s something that the industry and politicians need to consider. Domestic booking providers such as, AA Tourism and BookIt do a great job and the best thing is that bookings done through these companies ensure that the commission stays within New Zealand and reinvested into our economy. It is the international booking providers that I am worried about.

When a tourist from Europe, Asia or America books accommodation through one of the big international booking agencies that is commission that is lost to our tourism sector. This can be up to 10 per cent of the booking cost, and being zero-rated for GST, means that the accommodation provider here cannot reclaim GST paid on that commission.

These companies have no vested interest in New Zealand and our tourism sector; they are only there to clip the ticket. They charge a commission which is not reinvested into our economy, and does not contribute to the wages or taxes which keep our economy afloat. Many of them are squeezing accommodation providers hard by forcing them to push down prices in order to drive sales, a worrying trend in a sector where profits are under pressure across the board thanks to the tough economic climate.

Another aspect of this is a form of “Googlisation”; where companies with the biggest clout fight to be at the top of the search list on any online search for accommodation. The big international companies can use this ability to steer traffic away from the kiwi sites, and our tourism sector, like our economy, contains a lot of small businesses who struggle to resist the demands of companies far larger than they are.
Perhaps it’s timely to consider introducing a Commissioner for Small Businesses that can go in to bat for these companies that employ locally, pay taxes and make sure profits remain within New Zealand.

It is time for the government and the tourism sector to join forces to figure out how we can stop more cash from flowing offshore. This is not a problem that has sprung up overnight, or one that is unique to New Zealand, but it is one that we should tackle in these tough economic times, where we need to retain every dollar we can to help our economy and our people.


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