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New research on the tourism industry has revealed what kind of return New Zealand gets from its investment in tourism.
The three year yield study was undertaken by Lincoln University on behalf of the Government, Tourism New Zealand and the Tourism Industry Association in a bid to find out whether the tourism industry is economically viable and what can be done to improve it.
The research revealed that on average a New Zealand tourism business returns 5.7 per cent for every dollar invested in it.
This is below the return an investor might get if they put their money in the bank but confirms that tourism does have a positive contribution to the economy.
During the timeframe studied, from 1999 to 2003, racing, gambling, lotteries and other recreational activities such as bungy jumping and guided walks had the highest average return at 15.9 per cent.
This was closely followed by retail on 14.3 per cent and travel agency business on 14 per cent.
The lowest performing tourism businesses were those in the museum category at -0.5 per cent, and zoos, parks and gardens at 1.3 per cent.
This reflects the high level of asset investment needed for them relative to the low entry fees they charge to ensure visitors such as families can benefit from the facilities.
The return on investment for local airlines was the worst performer during the timeframe on -10.1 per cent reflecting the poor financial performance of national airline carrier Air New Zealand.
Overall the industry was found to have contributed $429 million in revenue to central Government during the 2003/04 year while its return to local Government was positive in some regions and negative in others giving an overall neutral return.
Tourism Minister Damien O'Connor said it had been known for a long time that tourism was a positive contributor to New Zealand but the study provided concrete evidence.
"While this is something we have known for some time, we now have solid research that verifies the industry's contribution to our economy."
Tourism Industry Association (TIA) chief executive Fiona Luhrs said the findings would be used to develop programmes and resources to help businesses improve their returns, attract investment, cope with market volatility and generate better profits.
"The ongoing success of tourism in New Zealand depends on every business delivering a quality experience to visitors, and doing it profitably and sustainably."
Individual businesses will also be able to work out their return on investment and compare it to others in the same sector and over time through a financial yield calculator on the TIA's website.
