Analysis shows New Zealand tourism industry reeling from COVID-19 crisis

A newly released SWOT analysis has shown the dramatic impact the Coronavirus crisis has had on New Zealand’s tourism industry, with the study gauging the current and potential developments in the sector.

A key component of the New Zealand economy, delivering substantial economic gains over the years, Tourism Industry Aotearoa (TIA) figures from before the COVID-19 pandemic show that the industry contributed $ 47 million per day to the nation’s economy in foreign exchange before the virus outbreak, with domestic tourism delivering $65 million.

With Coronavirus sparking an unprecedented crisis in the industry, triggering widespread revenue and job losses. While the industry is battling to survive the virus crisis, Kalkine Media’s extensive SWOT analysis of the sector shows:

Strengths
Though there seems to be a long way off for the New Zealand tourism industry to resurrect to the pre-pandemic stage, remarkable growth in domestic and virtual tourism is instilling strength in the beaten sector.

Virtual tourism emerged as a silver lining in the dark virus cloud, engaging travel-hungry New Zealanders. To offer a sense of voyage to travel enthusiasts, Tourism New Zealand launched a video game, PLAY NZ, in July 2020, guiding virtual tourists through a never-before-seen tourism experience. Likewise, some other tourism players also brought forth virtual travel adventures into the living rooms of travel lovers, keeping them engaged during lockdowns.

In addition, New Zealanders pivoted towards domestic travel amid COVID-19-driven overseas border restrictions, offering some sort of cushion to the battered travel industry. In June and July, Air New Zealand experienced a huge demand for domestic travel, especially into leisure destinations.

Moreover, 64% of New Zealanders intend to take domestic holidays over the next 12 months, as per a report unveiled by Tourism New Zealand in June 2020.

Weaknesses
Despite some promising indications, it is hard to overlook the impact of international border restrictions on the New Zealand tourism industry, particularly in terms of overseas revenue.

As per the recent data from Stats NZ, overseas visitor arrivals plunged by 252,000 in July 2020 relative to last year, with the biggest fall in arrivals seen from Australia. The Coronavirus-induced border and travel restrictions have reduced migrant departures and arrivals to the lowest levels in recent months. Stats NZ noted an average of 7600 arrivals and 19,000 departures in every month from April to July 2020, as against 526,000 arrivals and 555,000 departures during the same period in 2019.

Additionally, with household income and consumer spending levels having decline, these must spring back to support the tourism sector’s revival. There has been a considerable drop in household spending appetite amidst COVID-19, which is further weighing on the consumer confidence of New Zealanders. The Westpac-McDermott Miller consumer confidence index plummeted to 95.1 points in September 2020 quarter, which is the lowest reading since the Global Financial Crisis (GFC).

Opportunities
With Australia being New Zealand’s biggest source of tourists, the execution of a trans-Tasman travel bubble will potentially unfurl a slew of opportunities for both the nations. Speculation suggests that a travel corridor between Australia and New Zealand may be up and running by November this year.

While New Zealand was previously aiming for whole-Australia approach in resuming international travel, it is now planning to opt for a ‘hotspot’ regime. In other words, the nation is expected to open travel corridors with those Australian states, where the virus spread is contained. The initiation of the travel bubble is anticipated to rekindle trade ties between Australia and New Zealand, supporting the travel industry recoil to its pre-pandemic shape.

Notably, the trans-Tasman travel bubble is also likely to pave the way for New Zealand tourism corridors with other nations in the future.

Besides travel corridors, the eventual development of COVID-19 vaccine is also expected to remove a major stumbling block in the sector’s road to recovery, enabling New Zealanders to feel safe while travelling again.

Threats
With New Zealand into its first recession in decades, the recovery of the hammered tourism sector is unlikely to be easy.  New Zealand’s recession has heightened fears of a surge in the unemployment rate and decline in consumer spending over the coming months, which can set back the speed of the tourism sector’s revival. In addition, a second wave of COVID-19 infections also continues to remain a grave threat to economic revival.

Conclusion
It is difficult to perceive the actual shape of the tourism sector’s recovery from the global Coronavirus crisis, with New Zealandin its worst economic slump since the Great Depression.

Sooner resumption of overseas travel, critical vaccine developments and sustenance of critical government support seem vital for the sector’s uninterrupted path to restoration.

Source: Kalkine Media.

Main image: Tourism New Zealand's PLAY NZ video game.