Yuan fall no cause for panic

China is New Zealand's second-largest visitor market. Photo / Getty Images

Yuan devaluation will make NZ dearer to visit but suppliers must stay in for long haul.

An expert in the Chinese travel market says the devaluation of the yuan will have a mixed impact on the China visitor market but is advising New Zealand operators not to panic.

China is New Zealand's second-largest visitor market and government moves there last week resulted in a sharp slide in the currency.

General manager of New South Wales-based TravConsult, Lilly Choi-Lee, said the impact of the devalued yuan would immediately make destinations like New Zealand appear more expensive.

There were signs the luxury market could suffer temporarily and the increase in overall numbers may slow. In the past year the number of Chinese arrivals grew 32 per cent to 313,000.

Lilly Choi-Lee

"However those with money will continue to travel regardless and these are the ones New Zealand needs to continue to attract," Choi-Lee said.

The free independent travel market might be adversely affected.

However it would most likely be the cheaper group/shopping tours that would feel the impact because that segment was already price-sensitive.

But the Chinese travel market had proved resilient before.

Chinese outbound travel had continued to increase despite other upheavals such as frugality campaigns, new tourism laws and the slowing Chinese economy, she said.

Rising incomes and an expanding middle class mean that mainland Chinese travellers now represent 10 per cent of global tourism and more than a quarter of spending on luxury goods - with 70 per cent of these goods purchased abroad, according to data compiled by consulting firm Bain & Co.

Bloomberg reports that the biggest sell-off in the yuan in more than two decades - it fell 4 per cent against the US dollar - hit share prices of trip-booking sites.

Chinese airlines also dropped on concerns a weaker yuan would increase their borrowing costs and push up their fuel bills.

China Eastern, China Southern and Air China all slumped more than 5 per cent in Shanghai last week immediately after the central bank's surprise decision to allow its currency to fall.

Chinese airlines are increasing their capacity to New Zealand, with China Eastern about to start regular services between Auckland and Shanghai and in October China Southern will increase links to Guangzhou to twice a day year-round.

Choi-Lee's advice for NZ tourism suppliers:

• Those suppliers who have committed to the China market must remember it is a long-term strategy and should not panic at the slightest downturn - there will be more upheavals to come as the Chinese Government strives to increase domestic spending and improve its export markets.

• The yuan has been devalued with the United States dollar as a focus. This means the US will also be more expensive as a travel destination - as will Australia and other competitor destinations. New Zealand has the advantage of being a shorter-haul destination.

• New Zealand must remain calm and maintain marketing efforts - run some campaigns that give "added value" to the Chinese tourist who continues to visit.

• Now is the time to emphasise travel in the "low seasons" as that will naturally be cheaper and more attractive - capitalise on the "four seasons, five senses" campaign.

• Look after Chinese tourists who are currently visiting NZ - don't drop the ball in the panic over a devalued yuan.