Rotorua. Photo / Felix Desmarais - LDR
“Disastrous.”
That's how one local MP describes a new report that shows Rotorua has lost about $17 million in tourism spending in three months due to "negative perceptions".
The report also reveals wariness about visitors' safety has almost doubled since 2018.
Another local MP says it reiterates the need to tell Rotorua's positive stories, and the tourism minister believes the city remains a world-class destination that will "always attract visitors".
Some are calling for a Government boost to Rotorua's tourism marketing coffers, and warn damage to the destination's reputation could harm "brand NZ".
Released on Wednesday, the independent report commissioned by regional tourism organisation RotoruaNZ said if current trends persisted, Rotorua could lose $92m of visitor spending over 12 months, and would-be visitors' perceptions of Rotorua had "deteriorated over the past few years".
Negative perceptions included safety concerns and the cost of products offered.
Visitors were "conflating crime alongside social issues such as homelessness and emergency housing", it said.
A police official information release, reported in September, showed a sharp rise in crime along Fenton St - where most of Rotorua's emergency housing motels are concentrated - between 2018 and 2021.
The tourism report by economist Benje Patterson drew on information from ministries, government agencies, media monitoring and market research companies.
It said the problem was not a lack of visitor demand as nationally, the visitor economy had bounced back to 101 per cent of 2019 levels, while Rotorua's lagged at 84 per cent.
The report also dismissed a lack of accommodation capacity as being a factor, as only 40 per cent had been booked in the three months to July.
There was an increase in visitors who day-tripped to Rotorua and "circumstantial evidence" people opted to stay in neighbouring areas such as Taupō.
"Rotorua's poor performance is unique. Demand has returned with gusto in virtually every destination in New Zealand's visitor economy."
Visitor spending in Rotorua was second-lowest after Fiordland relative to its pre-Covid peak, compared to 30 other regional tourism areas. Spending in the Bay of Plenty, Coromandel Peninsula, Taupō and Waikato had "performed strongly" in their recovery, with spends of 104 per cent to 115 per cent above their pre-Covid levels.
Patterson's report said a study found a "strong pattern of reluctance to visit Rotorua" had emerged, with the proportion of domestic travellers saying they are unlikely to visit rising from 38 per cent in February 2021 to 48 per cent by March 2022.
Analysis of guest night market share data showed low numbers in Rotorua's visitor economy compared to the rest of the country had "only emerged since 2019".
Between 2014 and 2019, Rotorua maintained about a 5.5 per cent market share of guest nights nationally, which "plunged" to 3.2 per cent in the year to June.
In 2022, 11 per cent of would-be visitors cited safety concerns as a barrier to visiting Rotorua. In 2018, it was 5.8 per cent.
"Travellers being put off Rotorua by safety concerns is alarming because it risks becoming a deep-seated issue.
"These social challenges [related to homelessness and emergency housing] have been put front and centre of the visitor."
The report said mixed-use motels meant "some travellers are discovering upon arrival that their sense of holiday indulgency must coincide observing people in the most challenging social situations".
Rotorua MP Todd McClay said the report was "damning" and the "probable" loss of $92m over the next year was "disastrous for the local economy".
"This is more than just perception. It's the reality of the harm that's been caused through the Government using our motels as a dumping ground for the country's homelessness problem.
"This harm lays squarely at the feet of the Labour Government."
He repeated his call for a sinking lid policy on the practice of emergency housing in motels and wanted the Government to bump up police resources.
Waiariki MP Rawiri Waititi said the report meant it was important positive stories about Rotorua were told.
Rotorua had done "most of the heavy lifting" in the pandemic through things like MIQ and emergency and transitional housing.
"There has to be a time when this country then gives back to towns like Rotorua and help and allow it to rebuild itself.
"It affects whānau, but it affects Te Arawa and it affects the wider community there in Rotorua.
"We're all affected by this, as citizens of Aotearoa."
He would work alongside the new council and mayor and businesses to find solutions, he said.
"There's a lot of positive stuff happening in Rotorua."
Rotorua Restaurant Association president Sharon Wallace said the industry needed to take the lead as it had "resorted to being a bunch of moaners".
Wallace said winter was typically slow in Rotorua and "whining" had to stop.
"We have to be the change."
Restaurant owner Eduardo Diaz called for another report covering the summer months and said Rotorua needed to stay positive and look to its new council and mayor for hope.
"We are going through hard times but ... it will get better."
Restore Rotorua chairman Trevor Newbrook said emergency housing motels had a "detrimental effect on tourism in Rotorua".
"I personally don't think it's too late to save Rotorua's tourism, but something needs to be done now."
RotoruaNZ chief executive Andrew Wilson said the report articulated how significant the impact of emergency housing in motels had been with an "evidence base".
"Perception is reality.
"Our immediate concern is, if the issues aren't resolved and international visitor perceptions similarly start to deteriorate, brand NZ will also be impacted.
"If the Government doesn't move quickly to resolve these issues, the Rotorua visitor economy could lose close to half a billion dollars in just five years.
"We need more policing in our community and we need targeted support from central government to repair the brand damage that's been caused."
Rotorua mayor Tania Tapsell said the cost of having emergency housing was not just a social issue but an economic one that was "hurting".
"We've worked so hard over many generations to be one of the best tourism destinations in New Zealand and within two years, all that we've worked for is being destroyed before our eyes.
"The only way out of this is to find a better solution to the motels."
She said the Government needed to provide funding for destination marketing to restore the district's reputation and needed to urgently step up police resourcing in the city.
Rotorua Business Chamber chief executive Bryce Heard said the tourism sector was "taking a beating and showing a brave face in an overwhelming situation".
He said there was potential some "iconic" tourism businesses that had closed would not reopen and there likely needed to be a Rotorua tourism recovery plan with Government support.
"Brand damage control is what we need."
Emergency housing in motels had "certainly" had an impact on Rotorua's reputation, he said.
"Rotorua is a manaakitanga town, but it is not a nice feeling when that generosity is being taken advantage of - disrespected."
Tourism Minister Stuart Nash said he recognised the "tough situation" but he believed Rotorua remained a world-class destination that would "always attract visitors".
"I'm confident that Rotorua will experience an amazing summer as international tourists return."
He said over the last two years Rotorua, including its business community, had received support for tourism through Covid-19 and non-Covid-19 funds.
"The Government has invested over $38m into the region and city for events, infrastructure and tourism businesses."
He said the council had received more than $68m in grants through the Provincial Growth Fund for projects including the lakefront and forest redevelopments.
"The visitor occupancy rate in Rotorua was 42.3 per cent in July 2022 compared with 44.4 per cent for the rest of New Zealand, so I'm confident things will get better for the region."
He said the Government had funded 108 extra police in the Bay of Plenty, and whole how police distributed its resources was an operational matter for the agency, he understood 20 more frontline police had been stationed in Rotorua.
• Local Democracy Reporting is public interest journalism funded by NZ On Air.
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