KEY POINTS:
The tourism season got off to a slow start late last year and commentators are predicting a mixed year ahead with the high New Zealand dollar putting added pressure on an industry already worried about seasonality and sustainability issues.
Latest key tourism statistics show international visitor arrivals were up 3.1 per cent in the year to October 2007 although month on month visitor arrivals for both October and November were down on 2006.
Australian visitor numbers have been steadily growing and visitors from China have increased dramatically. But the UK has been flat while the Japanese and Korean markets have fallen significantly over the last year.
Tourism New Zealand chief executive George Hickton believes there will still be growth in tourism this year although there are challenges.
"The economic situation and potential credit issues going on in the US and UK are worrying, when it starts to hit wallets it affects people's holidays.
"The exchange rate is also an issue and there is also the environment. It is maybe not as big a problem as we thought at the start of 2007 but rising fuel prices will still add to the cost of the holiday.
"However, I still think we will be able to achieve further growth."
Hickton said Tourism New Zealand would focus on expanding the Australian market and hoped to improve the quality of tours for the Chinese market through a new licensing system that was introduced in November.
"China will be good but we are not confident about the US. The UK market should be OK."
Tourism Industry Association chief executive Fiona Luhrs believes the biggest challenge for tourism operators will be ensuring New Zealand becomes a sustainable destination.
"The challenge is for operators to be delivering on a sustainable basis and for local bodies to be wholeheartedly taking on that challenge. The Government has earmarked $3 million for public recycling bins. The emissions trading system is also due to be introduced and tourism is going to be in it immediately - there won't be many trading carbon but they will be on the receiving end of increased energy prices.
"We have estimated this could add between 3 per cent and 14 per cent to costs for tourism businesses."
The industry released a strategy document last year looking forward to 2015, and much of it will focus on sustainability.
The document has 92 actions and four outcomes and the key tourism bodies will spend the early part of this year working out the details which have to be with the minister by April.
Trevor Hall, chief executive of tourism operator Tourism Holdings believes the industry has got to take a hard look in the mirror about how it will handle the environmental focus.
"I believe it will only be handled by a huge lift in quality in the industry. We can't promote ourselves as being clean and green and put visitors in 15-year-old buses. It's got to be phased in over the next two to three years, not 10. We should target the World Cup."
Hall says the numbers in October and November show the season has already got off to a slow start and air capacity increases mean a lot more people are coming to New Zealand in the peak January to April months.
"It means we are dealing with a lot of demand during that time which will cause service, capacity and quality issues peaking more in February and March.
"We have got to fix the demand curve, there has to be lifting of prices in the February and March period to drive growth in the shoulder season.
"We are selling our summer too cheaply."
Hall says recent finance company collapses may also cause smaller highly leveraged operators to struggle, pushing some over the brink.
"I think it will be a watershed summer - the environment is becoming an issue for customers - don't underestimate the impact of the finance company collapses on tourism. Businesses are going to have to work a lot harder to maintain profitability."
John Thorburn, head of tourism operations for Ngai Tahu, which owns operations including Rainbow Springs in Rotorua and a share in the Kaikoura whale-watching operation, says the challenge is to remain competitive in a global tourism market.
"The New Zealand industry has changed a lot since it first started out. It was built on a base of many smaller businesses that were largely owner operated. But as markets mature we need to keep lifting the bar to compete with other countries which are now coming on to the scene."
BIG BUSINESS
* Tourism is NZ's largest export sector. It earned $8.3 billion in the year to March 2006 - 19.3 per cent of New Zealand's total export earnings.
* Direct and indirect contribution to GDP around $12.8 billion.
* Employs 108,600 people directly and 74,500 indirectly.
* Concerns for 2008 include the high New Zealand dollar, environmental and sustainability issues including worries about New Zealand's distance from key tourist markets and the seasonal aspect of the business.
