International Tourism Sector on Brink of Collapse

The numbers don’t lie. The international tourism sector is on the brink of collapse if targeted financial support is not made available for at least the next three months and if the self-isolation requirement for fully vaccinated visitors is not removed as soon as possible.
“The major concern we have is that we need decisions now on these two issues, not in three months’ time” says Chief Executive Lynda Keene of the Tourism Export Council of New Zealand (TECNZ).

“International tourism businesses are holding on by a thread. The situation is as dire as it could be and businesses desperately need help and hope. The international tourism sector that generated $17.5bn per annum for the NZ economy including $3.8bn in GST receipts is on its knees. We are not trying to be alarmist, we’re simply stating facts. For two years our businesses have done everything the government has asked of them, but the goal posts keep getting moved. The RED traffic light setting has exacerbated any chance businesses have had in trying to generate cash-flow and save their businesses. The survivability rate beyond three months looks grim.”

From data provided by Tourism New Zealand and IATA in 2020, TECNZ calculated that approx. 55% ($9.6b) of international tourism receipts came through New Zealand travel trade including ITO’s. Our most recent survey shows that if Inbound Tour Operators (ITOs) do not receive targeted support and if the self-isolation requirement is not removed by May 2022 then 15% of Inbound Tour Operators (ITOs) said they definitely will not survive and 65% said they might not survive. Combined that is up to 80% of all ITO’s under threat. Every ITO distributes their bookings to hundreds of tourism business across New Zealand. If ITO’s do not survive their bookings will simply vanish. This will severely impact on the recovery of international tourism and the New Zealand economy for many years to come.
This is echoed with survey results from our Allied members (activity/attractions, transport, accommodation) showing 44% aren’t sure if they will survive the next three months and 15% saying they won’t. This is because these tourism businesses have been in lockdown for half of 2021 and now severely restricted with the Red Light setting. Looking forward they also realise that international visitors simply won’t come to NZ to holiday if they must self-isolate. We are talking about hundreds of businesses across New Zealand on the brink of collapse.

The majority of international tourism businesses in the visitor economy rely on ITOs to book business for them. Those tourism business that may survive the coming months are at risk of not being able to access international visitors. Almost half (50%) of tourism businesses surveyed said they do not have funds to travel offshore and market their business or funds to develop updated brochure, collateral and assets for offshore travel partners. Therefore reliance on ITOs is more vital than ever to the wider international tourism sector.
Continued marketing by ITOs and Tourism New Zealand is vital for NZ to keep our market share of international tourism that has taken over 50 years to achieve. It’s a competitive market-place and NZ must have a strong voice and profile. It is imperative Tourism New Zealand is mandated to refocus its budget on international marketing and ITOs are resourced appropriately to capitalize on converting the millions of dollars in the system to actual visitors on the ground.

Competition with our main destination rival (Australia) is fierce, and now they have the ultimate USP – they have QFT commencing THIS MONTH. Many other destinations around the world have already removed all barriers to travel including the removal of any pre-arrival testing.

Scott Mehrtens, Chair of Tourism Export Council of New Zealand said, “Forward bookings for the next 2 ½ years are dramatically down compared to what they would normally be. The removal of the border self-isolation requirement is critical to ITOs retaining the existing bookings in the pipeline. If the self-isolation requirement is not removed, it is anticipated that the vast majority of future bookings held by ITO’s will be shifted to other countries that are open for quarantine-free travel. e.g. Australia.

If the government does not provide financial support to our most affected industry and remove the isolation requirements, our stellar global reputation as world-class visitor destination will greatly be at risk. Businesses will not last till July 2022 when visitors are expected to return. We implore government to save NZ’s number one export industry (pre-COVID) and provide us with targeted support and a date for QFT that we can all ‘bank on’. The industry needs a lifeline.”

Survey results from ITOs and international businesses show if grants (with appropriate loss of revenue criteria) are not available, the best form of financial support would be with the reintroduction of the wage subsidy and resurgence support payment until the border reopens for QFT.

What is TECNZ asking for?
 A third tranche of tourism funding (grants) for international businesses
 Targeted financial support for ITOs and tourism businesses most impacted with border closure for visitors and RED setting impacting domestic travel
 A target date for no isolation and Quarantine Free Travel for fully vaccinated visitors
TECNZ is preparing a business case for financial support. We hope to present to Minister Nash in the next few days and hope Cabinet will give serious consideration to supporting the recovery of NZ’s international tourism sector.
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Media contact:
Chief Executive, Lynda Keene, phone: 027 66 44 836

About TECNZ
The Tourism Export Council of New Zealand (TECNZ) is a trade association that represents the interests of the inbound tourism industry since 1971 (50 years). Its membership includes inbound tour operators (Inbound Members) and attraction, activity, accommodation, transport suppliers, regional tourism organisations and tourism services providers (Allied Members). Pre-COVID TECNZ represented 76 Inbound Tour Operators and 241 tourism business across New Zealand.