Industry Overview

• International Market
• Domestic Tourism

Tourism accounts for 9.7% of GDP and supports over 10% of jobs in New Zealand. It contributes to the wider wellbeing of New Zealand in a number of ways:

• Regional economic benefits - tourism is a major economic driver in regional areas, particularly domestic tourism. Tourism distributes benefits widely, providing much needed employment and improved earnings for regional businesses.
• Environmental protection - New Zealand's unique natural environment is a core component of its value and appeal. The preservation and enhancement of New Zealand's environment are goals consistent with and necessary for the continued success of tourism. Tourism provides an economic rationale for the pursuit of these goals.
• Community services and facilities - the facilities and activities sought by tourists are also those desired by local residents. Accordingly tourism provides local and regional government, and businesses with the demand necessary to sustain higher grade hospitality, recreation, sporting, entertainment and leisure facilities and services.

International Market

International tourism has been one of New Zealand's best performing export sectors over the last 10 years. Between 1991 and 2001, visitor arrivals doubled and visitor expenditure increased even faster. Two-thirds of total visitor expenditure in 2001 came from four key markets: Australia, Japan, North America and the United Kingdom.

International Visitor Arrivals and Expenditure (Actual and Forecast 1991-2007)

The medium to long term outlook for tourism remains positive with international arrivals forecast to increase by an annual average of 6.3% to 2007. This growth pattern is consistent with the historic growth pattern of the past three decades. In addition, international expenditure is forecast to increase at an average annual rate of 7.8% to 2007 by which time international tourism is expected to contribute $8.1 billion to the economy. These forecasts reinforce the increasing role of tourism within the New Zealand economy.

In the short term, data suggests that international visitor arrivals are continuing to increase this year, despite the effects of September 11. Indeed, based on the level of growth achieved to date in 2002, we expect tourism demand to continue to grow through the coming New Zealand winter season.

New Zealand has around double the number of international arrivals in our peak month of December compared to May. Understanding these demand patterns is an important industry issue. One of the key challenges is to develop initiatives that minimise or accommodate seasonality effects by targeting particular markets or developing shoulder or winter season tourism products and services. For instance, the mid-winter rise in international holiday arrivals reflects the growing importance of the ski industry as a winter tourism activity.

New Zealand outbound travel has a quite different pattern with a trough in the New Zealand summer season and reasonably consistent outbound activity throughout the rest of the year. In contrast to international arrivals, New Zealand outbound travel has an average monthly rate of decline of 4.2% to date in 2002.

Domestic Tourism

Domestic visitors form a solid economic base for the industry with domestic day trip and overnight visitors generating $6.27 billion in total expenditure in 2000 (Domestic Travel Survey 2000). As such, domestic tourism establishes a strong base of demand for many tourism products and services.

Domestic tourism is growing at a much slower rate than international tourism however, with domestic visitor nights forecast to increase by an annual rate of 0.9% to 2007 (compared to 6.3% for international visit arrivals). As such, international tourism will account for an increasing proportion of total expenditure. Further, international tourism is an earner of export receipts while domestic tourism essentially transfers expenditure within the economy rather than generating new wealth. It should also be noted that where a domestic trip is taken instead of an international trip, it does have an import substitution effect.