A new Chinese travel law that has been implemented is being blamed for the significant drop in tourism numbers coming into New Zealand. Statistics New Zealand shows why this decline is of less impact than we assume.
A new Chinese travel law that has been implemented is being blamed for the significant drop in tourism numbers coming into New Zealand. Statistics New Zealand shows why this decline is of less impact than we would assume.
The new travel law places a ban on tour operations subsidising tour prices by packing itineraries with selective shopping destinations.
Before the law was created Chinese tourism companies could add on another 30 percent to the cost of New Zealand tours promoted in China.
The law includes measures to address issues such as tourist safety, unfair competition, and forced shopping trips, in which agencies offer cheap tours but recoup their costs from commissions in partner shops.
Government figures show that tourist numbers boomed September 2015, but since the law late last year, the numbers have dropped 12 percent in October – the same month as the law passed – 16 percent in November and 11 percent in December compared to the previous year.
Annual growth in the number of Chinese visitors was tracking at 27 percent to 236,336 in the 12 months ended September 30, slowing to an annual gain of 16 percent to 228,928 the same time in 2013.
Even though Chinese tourism numbers have fallen, the economic gain hasn’t changed. Although there are less bulk tour groups there are smaller groups paying for higher class experiences. Experiences that involve more culture rather than larger cheap tourist attractions.
Ben Goodale, managing director of JustONE, says that this change in the expected market inevitably will result in some inconsistent consumer impacts on retail.
“The Chinese economy – and therefore the Chinese consumer – is maturing. It’s well established that there is a big rise in independent travellers from China, and conversely a decline in organised trips.”
According to Statistics New Zealand, China is the second key international market following Australia and is responsible for 41 percent of our tourism industry.
Goodale says that our tourism markets have been relying on these Chinese visitors, but would be smart to adapt to the new demands that are looking for quality and not quantity bases trips.
“If a retailer/retail centre has been over-reliant on lots of tours and the numbers drop, independent travellers won’t necessarily replace it as they will go where they like.”
Goodale’s comments back up BusinessDesk data that Chinese visitors are now more aware of ‘tourist traps’, and are starting to opt for more genuine tours and experiences.
“However, tourism in general is rising and tourist centres will replace lost trade with new, although the impact on some retailers may be greater,” says Goodale.
Not only is the number of tourists declining, the average stay of these Chinese guests is also changing.
Statistics New Zealand says that in 2015 China was the highest annual visitor and stayed the longest amount of time. Now, assuming the new law is the culprit, the Chinese market is now coming second in both categories.
Where China used to come first in both categories has now been overtaken
The recent drop in visitor numbers was also felt in a reduced number of people coming for business. The same government figures from Statistics New Zealand show the number of people coming to do business from China fell 43 percent in December from a year earlier and were down an annual 18 percent.
The Ministry of Innovation and Employment statistics show that in the year ending December 2016 the international visitor expenditure’s growth per annum from China was down 1 percent, which equals out to an average of 1.6 million in economic losses. Not exactly a small amount.
Tourism is usually New Zealand’s largest export industry in terms of foreign exchange earnings. It directly employs 7.5 percent of the New Zealand workforce (around 300,000).
For the year ending in March 2016 total tourism expenditure was NZD$34.7 billion, an increase of 12.2 percent from 2014.
In 2015 the Chinese tourism sector was expected to be New Zealand’s largest market in terms of spending till 2017. Although per original statistics it is now Australia that has taken that spot.
The expectation of China overtaking as the biggest market by 2017 has dropped since the new law
The expectation the tourism sector was correct upon was that Australia would continue to be New Zealand’s biggest market by arrivals. On average Auckland International Airport sees 1 million Australian visitors through its gates each year.
The increase of tourists from China that are looking for a genuine New Zealand experience means that retailers, hospitality and the tourism sector alike will need to cater to those demands. Chinese consumer culture is heading more towards the quality of an experience and that is showing through the most recent statistics.