Market Profile: The New Zealand Inbound Tourism Market to Australia

Market Profile: The New Zealand Inbound Tourism Market to Australia

Executive Summary

Inbound tourism presents a crucial contribution to the Australian tourism market. Within this domain New Zealand currently represents the largest market of inbound travellers. However, from evidence that is being forecast as part of Tourism Australia’s Tourism 2020 campaign it would appear that this is about to change rapidly over the next decade, with Chinese inbound tourism predicted to grow by 23.7 per cent (Tourism Research Australia, 2014).

In order to continue the steady pattern of growth exhibited by the New Zealand inbound tourism market into Australia it is critical that an understanding is gained in terms of what exactly is driving current demand. The market profile for this demand is viewed from several different perspectives; first, a snapshot of the current demographic and spending patterns of New Zealand inbound tourists is created before the lens is turned towards highlighting current market performance, reasons for visitation and observing any patterns of seasonality which may exist. Market trends are also investigated, and the perception of Australia by New Zealand inbound tourists as a relatively safe tourist destination coupled with an increase in both cheap air fares and flight frequency appears to be key to sustaining current market demand.

Analysis of current patterns of visitation and future market trends reveals that the focus of the Australian inbound tourism market is undergoing a transformation; the prominence of trans-Tasman routes as the market leader for Australian inbound tourism is changing as Asian markets grow and dominate the market, eclipsing New Zealand’s current market position.

Introduction

The Australian inbound tourism market is a significant contributor to the national, state and regional economies (Australian Government Department of Resources, Energy and Tourism, 2014). Inbound tourism within the context of this market is defined as “overseas visitors who intended to stay in Australia for less than twelve months” (Australian Government Department of Resources, Energy and Tourism, 2014, p.1). The analysis of the arrival and departure patterns of inbound tourists forms a critical part of the Tourism Australia Tourism 2020 campaign initiative which is designed to reveal the potential catalysts for future tourism market growth in Australia over the next decade and beyond (Tourism Australia, 2014a). As the largest inbound tourism market into Australia, New Zealand tourism represents a key player in a competitive and, at times, often turbulent marketplace. Tourism Australia (2014b, p.15) notes that there may be some respite however, and states the following with regard to visitors departing New Zealand:

New Zealand outbound data for the year ending August 2014 indicates that Australia’s market share has turned a corner. Australia’s share is now returning to growth after softening in recent years due to increased competition and aviation capacity to Pacific Islands, Hawaii, mainland USA, and South East Asia, particularly during the winter months. Kiwi travel to Queensland posts in particular has been strong this year, up 16 per cent between April and August.

Capitalising on the reasons as to why this growth has occurred ties in with the main foci of the Tourism 2020 campaign as it moves from what Tourism Australia (2014c, p. 3) refers to as the  “setting the foundations” phase in 2015 to its ‘seeing the results” phase (Tourism Australia, 2014c, p. 3). In order to do this, the creation of a market profile of the trans-Tasman inbound visitor market is fundamental to understanding the variety of characteristics that make up this market.

This report provides an overview of the New Zealand visitor market to Australia and is divided into several sections. Understanding the key performance indicators and reasons why New Zealand residents choose Australia as a destination is important, as the expected market growth before 2020 for this market alone is anticipated to be worth between $AUD 3.4 to 4.2 billion (Tourism Australia, 2014a). This makes conducting a robust examination of the progress towards this goal within the current trans-Tasman market paramount. This investigation will be undertaken in six stages. First, an examination of the most recent performance overview in relation to the inbound New Zealand tourism market to Australia will be conducted. Second, a profile of New Zealand visitors will be presented in order to illustrate the demographic characteristics of the key market sectors which drive New Zealanders across the Tasman.  Third, the reasons for visitation will be examined followed by the fourth section which contains a brief overview of current seasonal visitation patterns. The fifth section will provide some context with regard to current market trends that exist within the Australian inbound tourism market before the final section that concludes with some remarks on where the New Zealand inbound tourism market fits within the umbrella of Tourism Australia’s Tourism 2020 campaign.

Performance Overview: The New Zealand Inbound Visitor Market in 2013

In 2013, New Zealand was Australia’s largest inbound market for visitor arrivals, and the fourth largest market for total expenditure and the third for visitor nights (Tourism Australia, 2014a). There were 1,193,200 arrivals from New Zealand in total over this twelve month period (Australian Bureau of Statistics, 2014), and the total dollar spend during this time from New Zealander visitors was estimated at $AUD 2.3 billion, which was an increase of 2 per cent on the previous year (Tourism Australia, 2014a).

New Zealand was also the second largest market during 2013 for what are known as “dispersed nights” (Tourism Australia, 2014a, p.1); this term refers to nights that are spent outside of the gateway cities of Sydney, Melbourne, Brisbane and Perth (Tourism Australia, 2014a). The October 2013 issue of Tourism Research Australia’s bi-annual Tourism Forecasts estimated that visitor arrivals from New Zealand would increase 5 per cent in 2013/14 and 4 per cent in 2014/15, with an annual compound growth rate of 3 per cent expected until 2017/18 (Tourism Research Australia, 2013a).

Visitor Profile

Table 1 shows a breakdown of the profile of inbound New Zealand visitors to Australia in 2013.  Tourism Australia (2014a) reported that 94 per cent of New Zealand tourists that travelled to Australia in 2013 were repeat visitors. When considering the positioning of Australia as a tourism destination, links have been proven to exist in the importance of repeat visitation as a catalyst for future tourism market growth (Divisekera, 1995; Morley,1998; Seetaram 2012). In terms of demographics, the largest age cohort of visitors occurred within the 45-59 year age group (Tourism Research Australia, 2013b). Seventy-two per cent of New Zealand visitors reported that the purpose of their visit was for leisure (Tourism Research Australia, 2013b), and the average length of time of each visit was 14 nights in total (Tourism Research Australia, 2013b). On average, each visitor spent $AUD 2,127 during their time on Australian soil (Tourism Research Australia, 2013b).

Table 1: Visitor Profile for Inbound New Zealand Visitors to Australia in 2013

Source: Tourism Australia (2014a).

Reasons for Visitation

Whilst 72 per cent of New Zealand visitors reported that the purpose of their visit in 2013 was for leisure (Tourism Research Australia, 2013b), the Australian Bureau of Statistics (2014) also report that other leading reasons for visitation during this period were to spend time visiting friends and relatives, for business purposes, for educational purposes, and in order to further potential employment prospects (Figure 1).

In terms of business events held in Australia it is pertinent to note that New Zealand is cited by Tourism Australia (2014a) as providing the largest inbound conference market within the tourism sector, while there is also a burgeoning niche market which has been created around special interest events (Hall, 2007; Hall & Sharples, 2008) and sports-related travel (Tourism Australia 2014a).

Figure 1: History of Visitors from New Zealand by Purpose of Visit

Source: Australian Bureau of Statistics (2014).

Seasonality of Visitor Arrivals from New Zealand to Australia

New Zealand visitation to Australia follows a regular seasonal pattern. Figure 2 indicates that the busiest seasonal peak periods for travel to Australia from New Zealand occurred during the months of February to April and August to October in 2013 (Australian Bureau of Statistics, 2014).

Figure 2: Seasonality of Visitors from New Zealand to Australia

Source: Australian Bureau of Statistics (2014).

Market trends

Air Travel and Access to the Australian Market

The trans-Tasman route is noted as being the busiest in Australia in terms of capacity and the frequency of flights available (Tourism Australia, 2014a). The ongoing market growth of this route has been driven not only largely by price competitiveness between airlines (Tourism Australia, 2014a), but also by the creation in 2013 of the Qantas/Emirates alliance (Bradley, 2013), along with Virgin Australia (2014) opting to add seasonal services such as their flights from Christchurch to Perth (December-April) and Auckland to the Sunshine Coast (June-October). Air New Zealand lead the market in terms of passenger share in 2013 (Table 2), carrying 47 per cent of inbound travellers from New Zealand to Australia (Department of Immigration and Border Protection [DIBP], 2014).

Table 2: Key Airlines Between Australia and New Zealand and Share of Passengers 2009 – 2013

Note: Table includes direct and indirect capacity

Source: Department of Immigration and Border Protection (2014)

Key Factors Driving New Zealand Visitors to Choose Australia as a Destination

Table 3 indicates the most important factors for New Zealand visitors to Australia as derived from Tourism Australia’s 2014 Consumer Demand Project: Understanding the New Zealand consumer profile. The leading reason according to respondents was the attractions that were available to visit at 54 per cent (Tourism Australia, 2014d), followed closely at second equal on 53 per cent by the fact that Australia is perceived as a destination that offers both value for money and a sense of security (Tourism Australia, 2014d). Also notable within these key factors listed is not only the hospitality on offer (rated at 33 per cent), but also the attraction of local food, wine and cuisine which is provided as a reason by 32 per cent of respondents (Tourism Australia, 2014d). This last factor mentioned is a reflection of the importance placed on wine tourism and gastronomy as an important part of the Australian tourism industry (Alonso & Liu, 2010; Getz, 2006; Hall & Sharples, 2008).

Table 3: Most Important Factors When Selecting a Holiday Destination

Source: Tourism Australia (2014d).

The Future of the New Zealand Inbound Travel Market to Australia

Outbound travel from New Zealand to Australia has not only been buoyed by cheaper air fares and an increase in flight frequency (Tourism Australia, 2014) since the late 2000s, but also by the Australian dollar reaching near-historical exchange rate heights with the US dollar and the greater parity between the Australian and New Zealand currencies (Tourism Australia 2014). The aforementioned ease of access to market for New Zealand outbound travellers has not only seen alliances form between airlines whose focus is on the trans-Tasman route, but also between traditional holiday booking agencies as well. Reid and Pearce (2009) note that booking agencies in New Zealand have now consolidated to five major wholesalers (Air New Zealand, Go, Gullivers, Infinity and Travel Plan) in a move designed to maximise product distribution and profitability (Reid & Pearce, 2009). Online booking has also resulted in a rise in the amount of direct sales to consumers and a move away from traditional outlets.

This growth is predicted to be eclipsed by a changing market though within the next decade; Figure 3 illustrates the forecast growth that New Zealand is expected to contribute to the Australian inbound tourism market by 2022 (Tourism Research Australia, 2014). Note that in Tourism Research Australia forecasts New Zealand is predicted to lose its current leading position in the inbound tourism market to be the second biggest market with 9.3 per cent growth forecasted (Tourism Research Australia, 2014). This in great part is becaue of the predicted long-term growth in Chinese outbound tourism given their population base, rate of per capita economic growth and increased flight connectivity between China and Australia. China is forecast to become the market leader for Australian inbound tourism, with a 23.7 per cent contribution to growth forecast (Tourism Research Australia, 2014).

Figure 3: Forecast contribution to growth of the Australian inbound tourism market by 2022

Source: Tourism Research Australia (2014).

Conclusion

Understanding the motivations behind what drives New Zealand inbound tourism into Australia is fundamental to the ongoing growth of this market. The forecasted rise of Chinese inbound tourism into Australia illustrates the buoyant position in which the Australian tourism market finds itself in 2014. Whether the forecasted changes in international inbound tourism demand proposed under Tourism Australia’s Tourism 2020 campaign moves beyond mere theory to actualisation remains to be seen however, especially given the potential for volitility in the tourism market following changes in exchange rates, financial crises and the cost of aviation fuel. In the interim, sustaining New Zealand inbound tourism growth can occur through simply ensuring that seasonal demand fluctuations are met, and that new opportunities which may present themselves within this market are capitalised upon.

Attracting repeat visitation from the New Zealand visitor market is not only about providing value for money, but also following current market trends in terms of what types of attractions tourists would potentially patronise during future visits. In the light of this it is important that further special event tourism activities are developed, funded and supported, for it is these unique events that not serve to attract both new visitors and repeat visitation, but are also create a lasting, and hopefully positive, impression of the destination itself.

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