Rebounding New Zealand tourism is a rare bright spot for its economy

By Lucy Craymer

WELLINGTON (Reuters) – When cruises started taking bookings at the end of the COVID-19 pandemic, Australians Eunice and John Rowley quickly made plans for their first ever visit to New Zealand.

“We heard on the 9 o’clock news bulletin that they were opening up cruises and by the afternoon we had two cruises booked,” said Eunice, who is travelling with her husband on the Grand Princess around New Zealand.

“We’d never been to New Zealand, so we thought this is our opportunity.”

New Zealand’s international tourist sector disappeared overnight when the country became one of the first to seal its borders at the beginning of the COVID outbreak in early 2020.

But since borders fully reopened in August, foreign tourists have been making their way back and are responsible for one of the main bright spots for an economy battling headwinds as a possible recession looms.

International visitor numbers in January were already back to two-thirds of what they were before the pandemic began, according to the latest data released on Tuesday by Statistics New Zealand.

“It’s been pretty busy across our portfolio,” said Stephen England-Hall, chief executive RealNZ, which operates a number of tourist activities in New Zealand’s South Island such as cruises and jet-boat rides.

He said while not yet back to 2019 levels, demand over the New Zealand summer had been much higher than they had anticipated, with independent travellers in particular fuelling the recovery.

He said arrivals at some airports were actually higher than in 2019 but those good figures were offset by fewer tourists visiting by car, camper van and bus.

Before the pandemic, tourism was New Zealand’s largest source of foreign exchange and accounted for about 5.5% of gross domestic product (GDP).

The reviving sector is expected to have supported growth in the quarter to December. The data is out on Thursday and is expected to show a 0.2% contraction in the fourth quarter.

‘SOLID TOURISM’

Some tourism-related industries have even been performing better than before the pandemic.

Food and accommodation is up 10.3% on pre-pandemic levels, according to an analysis of Statistics NZ GDP data for the September 2022 quarter by the Wellington-based economics consultancy Infometrics.

Tourists are having to spend more because inflation in New Zealand is near a three-decade high but Brad Olsen, principal economist at Infometrics, said it was difficult to fully understand why the figure was up so much.

“Solid tourism activity is likely to partially but not fully offset weaker construction, retail, and manufacturing activity,” Olsen said.

While tourist arrivals from the likes of Australia and the United States were returning to normal levels, the numbers for several markets, including China, remain well below pre-pandemic numbers.

China in January allowed group tours to 20 countries as it threw off its strict COVID policy, with New Zealand on this list along with Thailand and Russia.

The first Chinese groups arrived in February.

“The recovery varies from market to market based on airline connectivity and the late removal of COVID restrictions last year compared to other countries lifting travel restrictions earlier,” said Tourism Export Council New Zealand chief executive Lynda Keene.

Higher numbers of Chinese visitors are expected to begin showing up in the February and March data, she said.

“It’s encouraging to see we’re tracking in an upward direction,” she said.

(Reporting by Lucy Craymer; Editing by Robert Birsel)

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