11 Jun 2024

Costs rise for tourism industry, but domestic numbers remain strong

10:56 am on 11 June 2024
Two new slides at Hamner Springs Pools

Tourism hot spots such as Hamner Springs have seen a marked increase in costs. File photo. Photo: Hamner Springs Thermal Pool & Spa

The tourism industry is grappling with the cost of living, with bills rising across the board, but there are hopes it may mean New Zealanders will look closer to home when they need a break.

Hanmer Springs Thermal Pools and Spa marketing manager Shane Adcock said their expenses were on the rise.

"All of our costs are increasing just like every other organisation so that's squeezing our margins at the moment," he said.

The business relies on domestic visitors.

They had not felt much of a squeeze on their customer numbers, but he said that could change.

"I think there's also an element of those visitors who were perhaps looking at heading further afield whether that be people heading from the South Island up to the North Island or overseas are now staying a bit closer to home and that might include Hanmer Springs. That might include the Hurunui region," he said.

"So some of our visitors who may not be visiting us right now are being replaced by others."

Tourism Industry Aotearoa chief executive Rebecca Ingram said operators were relieved they had a good summer.

"Tourism businesses are indicating that they are also very conscious of cost at the moment, the cost of doing business. They're wanting to manage their pricing very carefully," Ingram said.

"But the feedback we're been getting is that Kiwis still did go on holiday over the summer."

Wellness tourism - where visitors seek out spas and retreats to relax and recharge - appears to be holding its popularity.

Wai Ariki Hot Springs and Spa.

Wai Ariki Hot Springs and Spa. Photo: Andrew Warner

Iwi-owned Wai Ariki Hot Springs and Spa opened in Rotorua last June.

General manager Debbie Robertson said it currently attracted mostly domestic customers and was doing well, despite tough economic times.

"People are looking after themselves. They're so much more aware of their health and wellness," she said.

"There's more of an appetite for them to spend money on themselves."

The thermal baths might not be something they went to four to five times a year, but she said they might treat themselves once or twice instead.

Air New Zealand chief executive Greg Foran said the airline was not immune to the cost of living.

The airline recently raised its fees for excess, overweight and pre-paid baggage, and moving pets.

"We're doing everything we can to keep costs down and we surely are. We've absorbed a lot and you can see that in some of the financial performance of the business," Foran said.

"But there are cases where we have to unfortunately pass that on in ticket prices."

Tourism New Zealand chief executive René de Monchy said cost of living pressures influenced people's travel decisions.

He expected they might hit Australian visitors more because we were a premium, short-haul destination that had become more expensive to get to since the pandemic.

But he was more optimistic about the impacts on longer haul travellers from markets like North America.

"The US dollar is very strong at the moment. We've probably got a bit of a buffer in terms of desire, good connectivity from a number of airlines, which breeds competition, and then a tailwind of a positive exchange rate means that I'd say that out of the US, I don't think that's having much impact on our appeal," he said.

de Monchy said they needed to create a promise for travelling in New Zealand and make sure the tourism industry is delivering it, targeting those who can and want to travel here.

"You don't want to be seen as expensive, you want to be seen as worth the price or a premium destination," he said.

"So that's really important and I know the tourism sector is always really focused at going 'am I showing for the money that you're spending for us, are you getting a great experience and great value in return?' That's probably even more important in tougher economic times."

Tourism New Zealand recently unveiled a new strategy to grow tourism by $5 billion over the next four years by attracting more visitors outside of summer.

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