China to be New Zealand's Biggest Source of Tourism

  • Published by Ozgur Tore

New Zealand tourism map

Visitor growth from China continues at record levels with Chinese New Year 2015 having exceeded all previous years. According to government forecasts, Australians contribute the most to total spend now, but China is likely to overtake by 2020, and the US is showing strong growth.

China and Australia will remain key markets in the coming years, with arrivals from these two countries projected to make up 56.1 per cent of visitors by 2021.

While visitor numbers grew by 5.3 per cent in 2014, total spend was up proportionately more, by 13.2 per cent in the same period. Total spend reached $7.4 billion by the end of 2014, almost at its pre-GFC high of $7.6 billion in 2007. The increase in spend per trip is driven by visitors staying longer. Average length of stay was up 3.6 per cent in 2014, to 19.9 days.

While visitors from Oceania (mostly Australians) made up the largest share of New Zealand’s international visitors up to 2014, is it evident that Asian markets are growing proportionately more than European markets in recent years.

Standout markets include the US (arrivals up 9.5 per cent in 2014) and China (arrivals up 15.7 per cent in 2014, having grown 82 per cent in the last three years). Arrivals from Australia were weaker than expected, up only 2.4 per cent, compared to the 5.4 per cent growth experienced in 2013.

The annual growth rate for Chinese visitors is expected to outstrip all other advanced economies. In terms of absolute volume, Australia will still be New Zealand’s largest market for arrivals over the forecast period, but growth in visitors from China outstrips all other advanced economies. Visitor growth from emerging markets, India and Indonesia, will be significant, albeit from a much smaller base of visitors.

Growth in visitor arrivals from emerging economies is complementing growth from advanced economies. China is already New Zealand’s second largest market in terms of visitor arrivals. India, Indonesia and other emerging markets in South America hold potential and are growing rapidly albeit from a low base of visitor arrivals.

Much of New Zealand’s future growth is expected to come from holidaymakers and those visiting friends and relatives. This is a critical dynamic. The number of international holidaymakers has been flat in recent years but is expected to improve rapidly over the forecast period.

Despite total spend from all visitor markets forecast to increase 48.5 per cent to 11.1 billion by 2021, average spend per day is forecast to fall slightly. For several years now, spend per day by visitors to New Zealand has been flat or falling. A number of factors are influencing this, including the soaring New Zealand dollar making New Zealand’s tourism product less price competitive.

Domestic costs of supplying tourism services such as restaurant meals can make New Zealand products feel expensive relative to the costs of services in the home country. Having said this, total spend is 17.4 per cent higher than it was two years ago. Spending in 2015 is expected to surpass the pre-GFC high of $7.6 billion in 2007.

The main driver for increased spend is that visitors are staying longer. Some markets are playing a larger role than others in this. For example, visitors from China are rapidly changing their travel patterns visiting more regions and taking on more activities. These factors lifted the average length of stay of this market by 15 per cent over the last two years, to 18.4 days, the trend is expect to continue.

Increasingly, emerging economies are boosting growth in value and not just volume. Visitors from emerging economies such as China, India and Indonesia will contribute a large proportion (28.6 per cent) of the total visitor spend.

For more details read the annual tourism forecasts

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