Rotorua NZ chief executive Andrew Wilson. Photo / Andrew Warner
Rotorua NZ chief executive Andrew Wilson. Photo / Andrew Warner
Visitors and tourists to Rotorua spent $32.9 million in one month, and business leaders say there are positive signs ahead for the city despite New Zealand’s dire economic forecast.
RotoruaNZ chief executive Andrew Wilson said domestic tourism spending jumped to $22.3m in November last year, compared to $20.6m in November2019. Over the same timeframes, international tourism spending fell to $10.6m from $11.8m, but the combined total was $500,000 more than in 2019.
Wilson said a recent survey of businesses in Rotorua showed many were feeling considerably better off and confident about the year ahead.
“Businesses are buoyed by the return of international visitors bringing with them not only economic activity, but vibrancy and optimism. They are generally feeling good about their forward sales and planning to pour capital into their business in the coming year, which are positive signs for Rotorua as a whole.”
RotoruaNZ anticipated the biggest challenge for tourism operators this year would be adapting to a new normal, but it was aware of businesses that have expanded or experienced growth.
“Many have made changes to their products, and there are also the usual challenges involved with hiring and training new staff. Returning to operating at scale will be an adjustment for most operators who have become accustomed to low visitor numbers since the start of Covid.”
The news comes after a new survey showing household economic confidence in the Bay of Plenty has plummeted, as one of the region’s major economic drivers — the kiwifruit industry — rides “rollercoaster” seasons.
The Westpac McDermott Miller Regional Economic Confidence, December quarter 2022 report showed household confidence in the Bay of Plenty plummeted to -26 compared to -6 in September.
Westpac senior agri economist Nathan Penny said falling kiwifruit returns, a softening forestry sector, house prices that had nosedived by more than 13 per cent since the November peak, interest rates and ongoing cost of living increases were starting to bite.
However, he acknowledged regions that were benefitting from the return of tourists and agriculture might fare better than others.
Rotorua Business Chamber chief executive Bryce Heard said Rotorua was tourism and hospitality-focused, alongside farming and forestry.
“Of those three, tourism is bouncing back, farming is chugging along and forestry is having a bit of a softer patch in the log market. The big employment numbers are in the tourism and hospitality game, so we are more optimistic in the Bay of Plenty as a whole.”
“We are getting reports of high levels of accommodation bookings with the hotels and motels for the long weekends, after coming off a speed-up over the Christmas holidays.”
“And people are feeling pretty positive about that.”
Rotorua Professionals McDowell Real Estate principal and auctioneer Steve Lovegrove. Photo / Andrew Warner
Professionals McDowell Real Estate principal and auctioneer Steve Lovegrove said house prices had probably dropped by 20 per cent, and that had curbed vendor enthusiasm.
‘’Even if it was 10 per cent, people can calculate that very easily - so, if you have a $600,000 property, you’ve just lost $60,000 in personal wealth. People are following the proverbial tighten-your-belt philosophy, and I’d say that very few would be moving in the opposite direction, and most people will be protecting everything they’ve got.’'
In his view, many were waiting to see what happened with the next Official Cash Rate announcement next month, and some of the the doom and gloom forecasts were not helpful.
New Zealand Kiwifruit Growers Inc chief executive Colin Bond said growers had been “under the pump” for some time due to rising costs, a lack of labour and Covid.
An even lower crop than 2022 was predicted for 2023, as well as ongoing adverse climatic conditions and continuing short-term challenges, he said.
“News like this dents grower confidence.”
Last year, kiwifruit growers contributed $1.992 billion to the Bay of Plenty economy. Nationally, it was about $2.2b.
A reduction in grower earnings in 2023 would have a flow-on effect on the local economy, Bond said.
Rotorua-Taupo Federated Farmers president Colin Guyton said the current dairy forecast was $8.50 to $9 per kgMS [milk solids], but high costs meant many were concerned.
“It’s been a real weird three years since Covid hit, and you can predict all you like but you never know what is going to happen. I’d like to think that food has become more important than some luxury items which we don’t necessarily need.”
“Confidence is a lot lower and it’s a crystal ball, but we have to make those assumptions because we’ve got to try to survive if it all goes pear-shaped.’'
Guyton said he was definitely being cautious, as a lot of farmers who had completed big projects due to a false sense of security may find the money wasn’t actually there to do it.
Scott Downs, from PF Olsen, said infrastructure spend and policy changes by China’s government to try to encourage more economic activity could sway in the forestry industry’s favour.
“So that’s a good sign for us. Talking to people in China, the malls are busy, the shops are busy, the markets are busy, the tourist places are busy, so it’s turning on.”
There was less supply of timber worldwide with fewer logs coming out of Europe and South America, which put New Zealand in a good position.
Downs said the wharf gate price for A-grade logs was $131 per cubic metre, which was about $5 less than the two-year average, but he estimated prices were likely to climb.
However, he was also remaining cautious.
“I think we will comfortably reach $5 above the two-year average in February or March, but we don’t want to see the prices increase too much and then crash in May, for instance, and that’s still a possibility.”
“We just want it ticking along nicely with some stability if we can, but sometimes the market does overreact both ways.’’
