Editorial: In need of the bungy bounce - why Aotearoa’s tourist operators must keep innovating

EDITORIAL

From commercialising bungy jumping to popularising jet boat thrill rides, New Zealand’s tourism stories have been full of innovation.

But at a time when economic and social reasons for attracting overseas visitors have never been stronger, research shows this country risks lagging behind others in refreshing its tourism operations. This crucial sector needs a reboot.

Before the pandemic wiped out international travel for more than two years, tourism vied with dairy as the country’s biggest export earner. Excluding GST the government desperately needs, total earnings from overseas visitors were $16 billion. Not so badly affected during the depths of the pandemic, Kiwis spent $21b on domestic travel.

It could take years to return to that level of spending. International recovery is plateauing and New Zealanders’ domestic holidays risk being crimped by tougher economic conditions. Those still keen to spend are increasingly doing so overseas.

A timely report from economists at Westpac has identified areas of vulnerability and how to compete for the nearly $3 trillion of spending by tourists around the globe that is coming as the world recovers.

The report says expansion of analytical capabilities in new digital technologies is key. This will allow better detection of changes in the operating environment. To that end, firms should be developing superior abilities to detect weak signals before problems emerge.

Importantly, it is acknowledged that many small operators in tourism – including those who get into it for lifestyle reasons – find it difficult to step back from the day-to-day grind. Those who survived the pandemic now have new challenges, soaring costs of supplies and job vacancies.

Across businesses of every size, there needs to be more investment in research and development. The Westpac report finds that accommodation and food services providers’ spent an average of just $2.5m on research and development per year

Less than half developed or introduced new service processes or work organisation methods each year.

The digitalisation of business needs to happen fast. Around the world, many travel and tourism operators have been at the leading edge of technological change. Airlines have been very early adopters. But it’s uneven, again the small operators can struggle to keep up. But artificial intelligence-informed chatbots and online virtual assistants are increasingly affordable and easy to understand. The report says these technologies are being used in New Zealand but the pace of adoption is slow with the main barriers cited as education and awareness.

This may mean building capability through mergers and acquisitions or by pursuing strategic alliances and joint ventures, the economists say.

Economies of scale would provide the means to create new service offerings, while access to new technologies would encourage the development of services more personalised to tourist needs.

And that is where New Zealand tourism businesses need to go. Most have the right products and services in what is still a highly desired country – it’s a matter of letting tourists know what’s on offer and streamlining ways to access them.