New Zealand / Analyst Insights
New Zealand’s Airlines and Hotels and Resorts Industries
by James Caldwell
Apr 02 2019

The depreciation of the New Zealand dollar has encouraged strong growth in domestic and overseas tourists over the past five years. The rising number of tourists visiting New Zealand has consequently driven strong revenue growth in New Zealand’s Airlines and Hotels and Resorts industries.

Both domestic and international visitor days have risen strongly over the past five years. Rising discretionary incomes and positive consumer sentiment have encouraged local residents to take more holidays, both domestically and overseas, driving demand for domestic hotels and airlines. On the other hand, the Central Government has promoted New Zealand as a tourist destination in international markets, which has promoted growth in inbound tourism over the period. The depreciation of the New Zealand dollar over the period has supported these efforts, as the cost for overseas tourists to visit New Zealand has declined.

Strong economic conditions in New Zealand, such as rising discretionary incomes and positive consumer sentiment, have encouraged New Zealand citizens to take more holidays over the past five years. In addition, the depreciation of the New Zealand dollar has made overseas travel comparatively more expensive than domestic travel, encouraging New Zealanders to holiday at home rather than abroad. This trend has significantly benefited the performance of the Hotels and Resorts industry, with industry revenue expected to rise at an annualised 7.3% over the five years through 2018-19, to total $1.7 billion.

The depreciation of the New Zealand dollar over the period has also encouraged greater interest in New Zealand as an overseas tourist destination. This has improved the competitiveness of New Zealand over other countries in attracting tourists. Traditionally, overseas tourists into New Zealand have come from Australia, the United Kingdom, the United States and Germany. However, the number of tourists visiting from China has significantly increased over the past decade. According to the Ministry of Business, Innovation and Employment, Chinese tourists spend more per night than visitors from other countries, contributing to the strong growth in revenue for operators in the Hotels and Resorts industry.

The increase in overseas tourists has been supported by a Central Government promotional campaign in overseas markets, attempting to boost New Zealand’s reputation as a tourist destination. These campaigns focus on New Zealand’s diverse unspoilt scenery, as well as its wildlife and low crime rate. These campaigns have had considerable success in boosting New Zealand’s reputation as a desirable tourist destination and contributed to a rise in international visitors. New Zealand’s geographical isolation ensures the easiest method of reaching the country is via air. Consequently, most overseas visitors arrive in New Zealand on an airplane, many on domestic New Zealand airlines. Consequently, the Airlines industry has received considerable benefit from rising overseas tourism, with industry revenue expected to rise at an annualised 2.3% over the five years through 2018-19, to total $6.5 billion.