Dollar's rise a worry for tourism

A higher dollar could make visitors cut back on spending. Photo / Richard Robinson

The jump in the New Zealand dollar is expected to add extra pressure to New Zealand's $20 billion tourism industry as visitors have less in the hand to spend here and it becomes cheaper for Kiwis to travel overseas.

Economist Shane Vuletich said the higher dollar was not the biggest concern facing the tourism industry but it certainly did not help.

Research showed a higher dollar tended to have a longer-term effect on tourists but in the short term the sector was fairly resilient to exchange rate fluctuations.

Vuletich said the higher dollar in the past few years had not had a huge impact on visitor numbers but people tended to economise their trip if the exchange rate was bad for them.

That usually meant spending less on attractions or down-grading their accommodation.

"They are still going to come to the country but they might just cut back. Those in the luxury or more discretionary spend areas of tourism were likely to feel it the most," he said.

But US65c was still low relative to the US80c the kiwi reached last year.

Vuletich said the main factor for independent travellers was pricing - how cheap New Zealand looked compared with other countries.

A higher New Zealand dollar also had the double whammy of making travel cheaper for New Zealanders.

"The last thing the industry wants is New Zealanders heading offshore to spend their money there."

So far, spending levels have remained flat - down just 0.1 per cent in March on the previous year to $6.123 billion - despite a 4 per cent fall in visitor numbers.

Tourism Industry Association chief Tim Cossar said the higher exchange rate was a worry for tourism, just like other export industries, but the sector seemed to be more deal sensitive than exchange rate sensitive at the moment.

"The reality is the performance of the economy they are coming from is probably the primary driver."