Industry takes on turbulence

BY ALAN WOOD

With world travellers shaken by a volatile economic climate, New Zealand tourism industry bosses say it is time to chase extra airline services to stimulate a rebound.

The Government has announced an extra $30 million for Tourism New Zealand's marketing budget, to a total of nearly $100m – the most TNZ has ever had to market our so-called "100% Pure" destination.

Not so long ago tourism was claimed as the top export performer for the country, but earnings of $9.3 billion in the year to March 2009 put it behind dairy with $9.9b.

Prime Minister John Key wants to drive new growth after the flatter tourism years since 2007, but at this week's Trenz 2010 (Tourism Rendezvous New Zealand) was reluctant to give an annual visitor growth target.

"Good times" for tourism are anticipated, though the recovery will not be easy, adds Associate Tourism Minister Jonathan Coleman.

With a new chief executive, Kevin Bowler, TNZ needs to perform each year to keep the Government top-up of what has been a funding base of $69m. Given the huge uncertainties that remain in economically constrained markets in Europe, TNZ and smaller regional tourism operators like Christchurch and Canterbury Tourism are devising a new gameplan. Target markets are Australia, the US, China and Germanic Europe.

Bowler's biggest worry is the country's reliance on the economically downtrodden airline industry: "I think aviation connections to New Zealand are probably the biggest macro challenge.

"It's a tremendously difficult industry, airlines, and also our simple geography means New Zealand is at the end of some very long thin air routes."

In tough economic times partnerships – such as the TNZ-regional tourism organisation joint $10m marketing campaign into Australia – are becoming more common.

Even some usually competitive airports are working together. Queenstown Airport chief executive Steve Sanderson says it is collaborating with Auckland International Airport (AIA), given that more than 70 per cent of international arrivals into New Zealand come through the northern hub.

Christchurch International Airport is a more direct competitor to AIA and has been vying with that airport to get new services to New Zealand, including from budget Malaysian airline AirAsia X.

AIA chief executive Simon Moutter says there has been talk that AirAsia X's investigation of a Kuala Lumpur-Auckland route had been interrupted by the Malaysian Government, which owns Malaysia Airlines.

"We've talked to AirAsia X on many occasions. The real issues for them are what their own Government will let them fly. You can see the issues they've confronted in Australia – they got kept off the KL to Sydney route.

"We have a similar issue on Auckland because Malaysia Airlines flies to Auckland ... [but] they're attracted to the destination and we hope at some point the Malaysian Government will allow them to fly."

Christchurch International Airport chief executive Jim Boult says the company is continuing in positive discussions with AirAsia X.

Continental Airlines this week announced it will fly daily to the North Island from its Houston hub. It has plans for nonstop flights by the new generation Boeing 787 Dreamliner to Auckland from November 201,1 subject to Government approval.

Key says constraint on air services into New Zealand is also being worked on by the Government.

There is a direct correlation between the price of air travel (cheaper seats) and increased demand as seen on trans-Tasman routes.

"We are committed to trying to do everything we can to build capacity by making sure we are a welcoming place for airlines that want to fly here.

"Obviously we welcome the news from Continental Airlines ... the Government has actively been in discussions with other airlines that are considering coming to New Zealand."

The Government has also had discussions with several countries about building greater air links with "open skies agreements". One of those, with talks in a "serious" ongoing status, is Japan.

Christchurch & Canterbury Tourism chief executive Christine Prince says too few flights provided by airlines like Singapore Airlines are creating bottlenecks in Asia.

Load levels are very high, so anything that can be done for route development to allow extra visitors will obviously benefit the region.

Prince has a vision that the regional tourism industry will contribute $2.09b to the local economy by 2013, up 1.5 per cent from now.

"That encompasses everything from [spending on] accommodation, transport, bars, restaurants, shopping ... one of the key things for us is going to be leveraging those [industry and regional] partnerships."

Key says TNZ's Bowler had been appointed partly in light of his communications background, particularly in the digital online space.

"We expect to see them [TNZ] have a substantial increase in the online marketing they will undertake, particularly in places like China – so we're launching in June from memory a 100% Pure online campaign just as an example."

The Chinese take around 54 million outbound trips a year and researchers expect that to increase to 100 million trips by 2020.

"It's going to double in the next 10 years and we think New Zealand can pick up its fair share of that," Key says.

In the shorter term the Rugby World Cup 2011 is looming.

Key is confident that the Government's target – that the tournament should bring in more than 85,000 visitors – is one organisers can cope with.

"In my view New Zealand represents the Holy Grail of the world cup when it comes to rugby.

"We are the place where internationally people want to come and watch the Rugby World Cup because of our historical dominance in the sport ... If we are as successful as we'd like it to be, then showcasing New Zealand to a massive worldwide audience will spark their imagination of wanting to have a visit."

TNZ USA Growth Strategy project director Tim Hunter says a more collaborative approach will be used in the United States, where the marketing body will partner with Air New Zealand – each contributing $15m annually – to give $30m a year over a five year period from 2010-11.

Funding would go into marketing and promotion avenues, such as television show America's Next Top Model which was brought to New Zealand for a cost to TNZ of around $500,000.

The US provides just under 200,000 visitors to New Zealand each year. TNZ has a "bold" target of around 330,000 US arrivals by 2014.

TNZ is also jostling for a presence on other high profile American shows, though it doesn't want to disclose which ones due to confidentiality.

"Celebrity culture is huge and if we don't leverage off that we're missing an opportunity," Hunter says.

- © Fairfax NZ News