Visitor spending 'to fall by 7pc'

By SIMON HENDERY, Tourism writer

Overseas visitor spending could drop by up to 7 per cent this summer, but the long-term effects of the travel crisis on the tourism industry remain unclear, the Reserve Bank says.

The bank devoted a special section of yesterday's quarterly Monetary Policy Statement to an analysis of the effect on tourism of the US terror attacks.

It says the industry's fears that the attacks would discourage visitors especially high-spending Japanese and Americans have been realised, "although perhaps not to the degree first anticipated immediately following September 11".

A rough calculation using Tourism New Zealand projections of forward bookings suggested overseas visitor spending during the peak October to February period would be up to 7 per cent down on last year.

The fall would be slightly offset by increased spending from New Zealand tourists who chose to holiday at home rather than travel overseas, the bank said.

The Tourism Action Group told the industry in September to plan for a possible 10 per cent reduction in international visitor numbers during the last quarter of this year.

The group said last month that it expected a 5 per cent reduction in numbers over the summer.

In its statement yesterday, the Reserve Bank said New Zealand's reputation as a safe and cheap destination would be countered by a widespread fear of flying, a weakening world economy and a shortfall of internal Australian air services after the Ansett collapse.

"The perceived safety of New Zealand is not expected to be sufficient to offset the effects of lower disposable incomes in our trading partners and the general aversion to travelling," it said. "However, a recovery, albeit slow, is expected to get under way relatively promptly."

The country's largest tourist operator, Tourism Holdings, said this week that it was unable to forecast how the travel crisis would affect its profits this year.