Economic Impact of Tourism – Project topics materials

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Definition of Regional Tourism

There is no clear definition of regional tourism. The trend for central government agencies such as the Ministry of Economic Development and Trade and Enterprise New Zealand is to move to fewer macro regions in New Zealand to integrate transport, urban planning, business development, tourism, and regional marketing and investment. Tourism New Zealand (TNZ), a crown entity responsible for marketing New Zealand internationally, has traditionally worked with Regional Tourism Organisations (RTOs) in its offshore marketing. In more recent years, TNZ has preferred to work with nine international marketing alliances (IMAs) or regional RTO groupings for both the North and South Islands. TNZ argues that the international market perceives New Zealand as a country and can only cope with a small number of geographic / regional offerings, and that New Zealand can only provide regional offerings to the Australian market.

Tourism in Comparison to other Major Sectors in the Waikato Economy

The 2007 Waikato Regional Economy report for Katolyst13 examined the major economic trends for the major industry sectors in the Waikato economy. Table 6: Output for Major Sector Groups in the Waikato Economy, taken from this report, shows the tourism sector’s ranking compared to other sectors. Sales values are in current dollars, and therefore incorporate price inflation from 2001 to 2006. Sales revenue is based on Statistics New Zealand data for regional economies, while all other statistics referring to visitor expenditure in this report are drawn from Ministry of Tourism research data. As this table shows, tourism is the fourth largest sector in the Waikato economy in terms of sales revenue and has experienced the highest growth per annum.

Tourism and Exchange Rate Fluctuations

Tourism growth nationally has been achieved despite the significant appreciation of the New Zealand dollar over the last three years. The New Zealand tourism industry appears resilient though affected by exchange rate fluctuations. Income growth in source markets has chiefly driven the long term growth of international visitors. Australian and UK visitor arrivals (50% of the inbound visitor market) are less sensitive to exchange rates than visitor arrivals from Germany, Japan, US, and South Korea. Holiday travel is more sensitive to exchange rate fluctuation than other travel segments such as Visiting Friends and Relatives (VFR) and business travellers. Visitor expenditure in New Zealand is considerably more sensitive to exchange rate movements than visitor arrivals. Overall, a 1% increase in the value of the New Zealand dollar reduces the expenditure per visitor by 0.81%, although inbound markets vary significantly, and the Australian market (the largest) exhibits no significant impact. It is assumed that these patterns will remain in the current environment of a falling New Zealand dollar.

Domestic Visitor Marketing

Figure 3: Forecast Visitor Expenditure by RTO shows that domestic visitors are the major and staple driver of visitor expenditure in the region. Table 9: Regional Comparison of Domestic Visitor Expenditure highlights that the Waikato is a significant national player and generates more domestic visitor expenditure than Wellington, whose RTO has run some very successful domestic tourism campaigns in recent years. The Waikato has a geographical advantage in the domestic visitor market because of its close proximity to New Zealand’s largest and fastest growing population bases of Auckland, the Bay of Plenty, and the greater Waikato (including Taupo and Coromandel). Appendix IV shows that the main drivers of the domestic market are VFR (visiting friends and relatives), then the holiday market, followed by the business sector. In 2006, Waikato hosted 13.5% of total New Zealand day visits, but only 5.6% of overnight visits. A day trip is defined as a trip by a person outside their usual environment of at least 40km one way or 80km return within New Zealand, completed within the same day. Appendix IV also highlights the low occupancy rates for accommodation providers across the Waikato, except for Hamilton.

READ Compliance with the Code

Potential Opportunities for Tourism in the Waikato

The potential opportunities respondents saw for tourism in the Waikato comprised the geographic location in terms of potential visitor flows and proximity to other areas, the events strategy led by Hamilton City, the natural landscape of the wider region, and potential product offerings, especially in terms of the region’s diversity. A summary of these discussions is outlined in the points below. Waikato’s location was seen as an opportunity for the following reasons: • The geographic location means a high level of tourist flow through the region (SH 1, 2, 3) • Waikato’s proximity to other areas, like Auckland, the central North Island ski fields, and Rotorua is an opportunity • The proximity of the Waikato region to Hamilton city could be better marketed, i.e. there is lots to see within an hour’s drive of the city • Hamilton International Airport is an opportunity, especially for targeting the Australian market.

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