Slower growth in tourism

Press, 31 August 1977, Page 29

Slower growth in tourism

After a decade of spectacular growth and expansion. New Zealand’s tounst industry has slipped into a period of economic uncertainity and frustration. The problem is two-fold, lecting both th e inbound and outbound sectors of an industry which, until now has successfully managed to protect its vulnerability from the recessive influences of the world’s fluctuating economic ills. That magic, however, appears to have faded this year when, for the first time in a quarter of a centurv, the number of overseas visitors to our shores decreased. Certainly the decline, at 1.1 per cent for the year ending March 31, was small, but "•hen compared with the impressive average annual in- 1 j u l 23 P er cent achieved between 1974 and iH/b, the implications of the trend — if it continues — become clear indeed. Most seriously threatened is the industry’s ability to: retain its present role as: fourth biggest earner of foreign exchange, a spectacular accomplishment, incidentally, in a relatively! short time. While traditional; export receipts increased bv per cent from 1972 to I;

receipts from tourism | in the same period climbed by an impressive 188 per cent — from 549.6 M to' SI43M. .And cv en last y ear. despite ■ the tall-off in visitor num-; bers, tourism earnings in-! creased by a further $2OM‘ to a record 5162.5 M. This in-1 crease from a diminished market can be attributed to' inflation, last December’s! devaluation, and the fact that I, the "missing” tourists were in the main, young (and , therefore less affluent) . Australians. Australia undoubtedly l holds the kev to the success . or failure of the New Zea-|j land tourist industry. There was a decrease of 3.7 per ') cent in the number of Aus-,, tralians who visited New ‘ Zealand in the vear ending March 31, 1977. The major worry for New t Zealand at present is that 1 its share of the Australian't

>t market might dwindle even ■-•further. Should this happen s and opinion is divided as d to whether it will — then i-1 we could be hard-pressed t< fill the gap. L Other market potentia. d does exist, but its successful a development to the size re- . quired to offset any serious ijfall in the Australian market 1 w ill reqire a considerable inf vestment of time, tnonev. j and effort. I No-one within the industry , iis prepared to predict s,whether the over-all decline ;| n tourist traffic will, for : i New Zealand, be a passing ' •‘phase influenced by economic: : trends or whether we have l simply lost our appeal, but! ; all agree that the current air! ;jof uneasiness will continue; i until there is again a big I increase in the flow, east-1 wards, of our neighbours; across the Tasman. j The effect this uncertainitv • is having on the New Zealand !tourist scene as a whole is! i being compounded by an l 1 even more serious problem; relating to the outbondf 'tourist sector. In this area everything is going wrong — a quite unnecessary situation ! for which the Government must accept the blame. 1 ; Last year Mr Muldoon expressed, with justification, :

ilconcern that the demand for I foreign exchange by New i Zealanders travelling overseas was too high. I In 1975 the figure was $186.4M, but the demand increased steadily during the i first half of 1976 with increases of 48 per cent in i March and 44 per cent in I June. i Mr Muldoon acted in July.! I His Budget imposed a 10 per! cent tax on the “transportation” component of all travel) |overseas, except to a number! iof our neighbouring Pacific! I islands. The tax, he said, would) ! apply a brake on the demand! [for overseas funds by New ; i Zealand travellers. The! measure, he added, would be I a temporary one until “our! external situation improved ”! Returns now clearly in-i dicate that this ill-conceived: tax has been a total failure. Indeed, instead of reducing the dram on funds, the travel 1 .

n tax, by openly inviting the i more affluent — and knows ledgable — traveller to evade i it. has had exactlv the reverse effect. The demand has increased ty 25 per cent, from S2O7M ■! ,-*£ ween Ju| y 19 "5 and June .19/6 to 5262 M during the J following 12 months -— a 11 period supposedly restrained .(by the tax. It is interesting to note i that during this same period, the number of New Zea- . I landers travelling overseas I increased by barely 1 per J cent, yet travel agents re,jport an average drop in ; business of more than 12 ; J per cent. i The picture that emerges is I plainly clear. New Zealanders fare simply by-passing their ; travel agents and paying for fas many of their “transportation” charges as ! possible once they are over- : seas. And they are drawing j additional funds to do so. Many believe the present allowance ($lOOO a month, with a maximum of 84000 in one y ear) is too generous and that the Government should have acted within this area instead of imposing a tax that has proven s n difficult to! administer. New Zealanders planning! short trips of even a few days can still draw the maximum allocation for a month, and if the trip extends to 32 days, then the applicant is entitled to $2OOO. If a credit card is carried, the travellet can buy virtually , any thing from a silver fox fur ■ to a first-class seat across lhe Atlantic on Concorde 1 ; without worrying about,, funds. A cheque drawn:, against his New Zealand!, account will settle the lot'; when he returns home. i ( I rave) agents w ho, along t with othei members of the i tourist industry have I vigorously opposed the tax, if

have observed a big increase !in the sale of one-way air I tickets. particularly to businessmen. They simply ; purchase their return ticket overseas which, •if London, |can represent a saving of up to $l5O in tax. As a source of revenue for lhe Government’s coffers in Wellington, the travel tax is working well — to Lhe tune of more than SIOM a year. But as an intended brake on the demand for foreign exchange, it is an abysmal failure.

LES BLOXHAM