Big drop in vital UK tourists may last years

The number of UK tourists who flock to attractions like the Cape Reinga lighthouse has fallen by 11.5 per cent in a year. Photo / APN

Tourist numbers from Britain are down more than 11 per cent and tourism operator Malcolm Johns says the vital market could drop for three years.

Visitor numbers from the United Kingdom totalled 226,721 during the year ended February - the second-biggest market by volume but showing a drop of 11.5 per cent on the previous year.

Johns, the chief executive of InterCity Group, said the UK and European markets were important because their tourists stayed the longest and spent the most per day.

However, British tourists' confidence in their own economy and wealth had taken a hit in the past three years and purchasing behaviour had changed since the global financial crisis.

"You're getting declining visitor numbers but they're also increasingly hunting for bargains and specials," Johns said.

According to the Ministry of Economic Development, UK visitors spent $668 million in the year ended December - a drop of 17.7 per cent on the previous year.

The higher New Zealand exchange rate had made attractions here more expensive but the Australian dollar was a greater cause for concern, Johns said.

Many tourists were dual destination visitors who also travelled to Australia.

"The rampant increase in the Aussie dollar is shaping up as one of our biggest concerns because if they decide that Australia's just too expensive, there'll be a flow-on effect to New Zealand."

Most companies hedged exchange rates to give themselves time to adapt, he said.

"You can't hedge yourselves away from those changes long-term, so most of the hedging came off in the end of the last year.

"So the new hedging that's coming out for people selling out of the UK and Europe to Australia and New Zealand is based on the high exchange rates now," Johns said.

"I can see it [UK] remaining in decline for two to three summers but I can't see it taking a dramatic decline - unless oil keeps going north, airlines change their approach to this part of the world and the Australian dollar keeps climbing."

The Rugby World Cup was an important springboard, he said.

"When you go through events like Christchurch and the Japan tsunami, and the [global financial crisis], and a general downturn, there are road markers that are key psychological turning points.

"I don't think anybody should be banking on making millions out of [the cup] but it's a really important platform to get profile for New Zealand into some of those key markets."

About 20,000 tourists could delay their visit into November and December to avoid the tournament, he said.

"If they do, this summer will be much better than everyone's expecting."

Tourism Industry Association chief executive Tim Cossar said the UK market was "bloody tough".

"As we've gone around the regions of New Zealand with our roadshows, that's been validated by a lot of the small businesses that have certainly noticed the decline in the UK market," Cossar said.

"[That market] for New Zealand is like bread and jam, really. It's one of the base markets that feeds our industry."

UK visitor numbers peaked riding the wave of the Lord of the Rings films and had fallen back since 2006 from more than 300,000.

"Rugby World Cup gives us that chance to be cool again," Cossar said.

"We've also got the opportunity of The Hobbit [movie] to get back on that Lord of the Rings bandwagon and really promote into that market."

Keeping the marketing voice in the UK was critical, he said.

Tourism New Zealand executive Gregg Anderson said the long-haul market out of Britain was suffering and New Zealand was not alone.

The traditional target markets of people close to retirement or newly retired were probably the ones sitting back, concerned about home equity and prospects for retirement savings, and with a government telling them they would have to work longer.

"Our view has been about doing everything we can to try and maintain the market," Anderson said.

"Particularly in the last 18 months since the recession really started to become apparent in the UK, we've put far greater emphasis on targeting the youth market," he said.

The other big opportunity this year was the Rugby World Cup.

"We really need to work to capitalise on word of mouth from those people that come down during the event."