Tourism NZ’s 100% Pure campaign turns 25. Video / 100% Pure NZ
The tourism sector is alarmed by new visitor fees, fearing they will hinder recovery.
Tourism Industry Aotearoa predicts fee hikes could reduce visitor numbers by 6.63%.
Minister Matt Doocey defends the fee increases, saying they shift costs from taxpayers to visitors.
The Government is under mounting pressure from the tourism sector where alarm bells are ringing over new fees for visitors as the international sector struggles to get back to pre-pandemic levels.
Growth targets have been revised down sharply by one leading tourism organisation which says what was oncethe country’s biggest export earner will now take seven years to recover and some new border charges should be delayed.
Tourism groups say new visa charges and looming visitor levies are sending the wrong message to potential tourists, one saying she was “perplexed” by the approach of the Government which had made the growing export receipts a priority when it came to power.
Growth in international tourism has stalled for much of this year, latest figures showing visitor arrivals at 3.2 million are only 83% recovered from a pre-Covid record year in 2019.
Latest full-year spending figures in 2023 show international visitors spent $11.8 billion, and while it has increased since then, it will be well short of the $17.2b in 2019 – the equivalent of 20.4% to New Zealand’s total exports of goods and services.
Then, 8.4% of the NZ workforce was employed in tourism and visitors paid close to $2b in GST to the Government.
Despite growing disquiet in the sector, Tourism and Hospitality Minister Matt Doocey says the coalition remains “highly supportive” of tourism and the slowdown in the rate of recovery was because of a normalising of travel patterns following the post-Covid rush.
Tourism and Hospitality Minister Matt Doocey. Photo / NZ Herald
Visitor visas will rise by $130 to $341 per person (a 61% increase) – hitting the key markets of China and India from October – and a working holiday visa will rise by $250 to $670 per person (a 59% increase).
Travel agents are now breaking the bad news to those already booked to come here that they will have to pay more.
“We’re not increasing cost – all we’re shifting is the cost from the taxpayer to the visitor,” Doocey said.
“We are affordable considering the cost of a long-haul ticket.”
The changes are worth $563 million for the Government over the next four years and he said one aim was to speed up visa processing times which have been attacked for being too slow.
Doocey, who today opened a fund to establish e-bike charging stations for New Zealand’s Great Rides, said the Government retained ambitious goals for the industry with a shift in focus to promoting the country during winter to help boost spending here to exceed pre-pandemic levels by 2028.
We’re not increasing cost – all we’re shifting is the cost from the taxpayer to the visitor.
While Westpac economist Paul Clark agrees with the minister’s view that the latest extra fees wouldn’t affect visitor numbers, Tourism Industry Aotearoa (TIA) calculates the country could be losing almost the same amount in international visitor spending.
Asked about its methodology, TIA said its calculation is based on demand impacts of an up to $170 increase in fees to enter the country.
Applying an estimated 6.63% reduction in visitors to the about 370,000 international arrivals to New Zealand from visa-required countries, would result in 24,500 fewer arrivals. Based on the average spend of international visitors of $4920, this would result in a loss of international visitor expenditure of $120 million.
The cruise industry is also worried about the imposition of new charges and has warned that cruise lines will continue to deploy ships elsewhere. The late introduction of new charges is especially difficult for operators with long booking lead times as they often end up bearing the full cost.
Chief executive Lynda Keene said a proposed increase for group tour fees had been reduced but the standard visitor visa fee and working holiday visa fee increases might just be high enough to take New Zealand off the must-visit destination list.
The last Government, which shut borders in response to the pandemic, had a sometimes fractious relationship with the tourism sector, which had hoped the new one – led by former Air New Zealand boss Christopher Luxon – would be more supportive.
Keene said “it’s a little perplexing because the coalition Government is technically more pro-business and has an understanding of business and the economy”.
Airlines and airports weren’t consulted on the visa fee changes which set off an alarm bell about the approach to the wider sector.
“So we know it’s a tricky environment for them [the Government] and they’re got to look after the economy, but I think in general terms, particularly with the airlines and the airports not being involved in the consultation process, it has set off a little bit of a bell.”
The council’s membership includes inbound tour operators and allied members including attraction, activity, accommodation, transport suppliers, regional tourism organisations and tourism services providers.
While increased charges individually may not deter a tourist from coming here, the combined effect would and it also sent out the wrong image of New Zealand.
“Most of us in the industry that have access to market intel are getting quite worried.”
Now was not the right time to increase visitor visa fees while the tourism recovery was still in progress.
The inbound sector and airlines price tickets and itineraries one to two years in advance, so an appropriate “runway” was needed for prospective visitors to have all the relevant information to base their decision upon to pay a deposit to travel to New Zealand, or not, Keene said.
“Whilst appreciating some cost recovery is required for visa services, the timing for full cost recovery is counterproductive in offshore markets to drive growth. Our preference would have been for increases to be implemented [in] October 2025, not this year.”
The increase in visitor visa fees is going to impact the high-growth market, India, and the recovery of New Zealand’s second-largest visitor market, China.
China Southern was the first airline to fly a Dreamliner into New Zealand. Photo / Greg Bowker
Both markets could be major influencers in helping our international tourism recovery, but there was price sensitivity in the markets and the increase in fees might work against New Zealand, Keene said.
The new fees follow new requirements for tourist visa applications to be submitted in English, which China Travel Service managing director Lisa Li was another potential expensive hurdle for clients who need to pay for translation services. While it could streamline the process, other countries didn’t require it and it was another barrier to come here from China.
In April, international arrival forecasts for 2024-2026 predicted that by the year ended March 2025, pre-Covid arrivals would be 88% compared to pre-Covid and by March 2026 the country would be back to 100% of pre-Covid arrivals.
But it has pushed that out.
But this month the council is forecasting that by May 2025 the recovery will be at 85%, by May 2026 96% and 100% recovery of arrivals by the year ended May 2027.
The latest forecast has taken into consideration a range of new assumptions including the lower-than-expected airline bookings reflecting a softening in many markets.
Keene said although the US, Australia, India and Canada have been star performers over the past two seasons, there was softening in those markets for the coming summer.
“In particular, the holiday segment is still sitting at 75% of pre-Covid arrivals so there is a lot more work to be done to push this higher.”
Auckland Airport forecasts international capacity will be running at about 90% of pre-pandemic levels this coming summer and growth had flatlined for what is a risky long-haul destination for airlines.
Doocey told the Heraldan announcement on International Tourism Conservation & Visitor Levy (IVL) was coming “soon” although he wouldn’t be drawn on a timeframe.
He said there had been “wide feedback” and support on the need to increase the levy on all but Australian and Pacific Island visitors and the final decision will also have input from officials.
Options are: leaving it at $35, increasing it to $50 which would raise about $115m, increasing to $70 to raise $161m and increasing it to $100 to raise $230m.
Keene hoped the Government would consider taking the IVL review off the table until the country is back to 100% pre-Covid arrival numbers.
If there is an increase the council wanted it to come into effect in 2025 or 2026.
“New Zealand must not become complacent that just because we are here that visitors want to visit,” she said.
“We must provide an affordable and compelling proposition for visitors to tick New Zealand on their list of places to visit. We need to continue to work hard in a very competitive global marketplace for airlines to keep New Zealand on their schedules and price points do affect decisions for visitors to say ‘yes’ or ‘no’ let’s go (or not).”
Grant Bradley has been working at the Herald since 1993. He is the Business Herald’s deputy editor and covers aviation and tourism.
