There will be 2.3 million international visitors arrivals in New Zealand in 2021, according to Westpac’s latest forecasts.
In a report titled Through the looking Glass – What Covid-19 means for New Zealand’s tourism sector, the bank said the impact of the pandemic on tourism would “dwarf anything that has gone before”.
“We are forecasting 2.3 million international visitor arrivals in 2021, compared to 3.9 million in 2019,” said the analysis, put together by the bank’s economists, Dominick Stephens and Paul Clark.
“The initial post-Covid-19 recovery will be led by domestic tourism and young international visitors.”
The bank said that once Covid-19 passed and travel restrictions were eased, “activity levels are likely to lift very rapidly”.
“However, we doubt they will return to previous levels any time soon. Even when travel restrictions are lifted, people will remain less likely to travel due to fear of Covid-19 and because their economies are going into reverse and incomes are under pressure.”
Westpac said the first active travellers would be those who were immune to the virus, either because they had caught it and recovered, or because they were vaccinated.
“We also suspect that young travellers are likely to return sooner than older travellers, because young people are less susceptible to Covid-19 and are therefore less fearful.”
There would “close to zero” visitor arrivals until September this year.
“After that, it’s likely that there will be a partial recovery, extending well into 2021 and beyond,” said the bank.
“As such, we are picking visitor arrivals to fall from what was an expected 3.9 million tourists in 2020 to just under 1m in 2020 – a 75% decline. Given an average spend of $3,300 per visitor, this suggests that the industry stands to lose about $12bn in revenue from offshore visitor arrivals in 2020.
“[Our] forecasts suggest that visitor arrivals in 2021 will be around 1.6 million below the 2019 level, equating to about $5.5bn lower revenue.”
The outlook for domestic tourism was better.
“New Zealanders will probably be deterred from travelling overseas either out of fear of Covid-19 or by other countries’ travel restrictions.
“Consequently, Kiwis will holiday at home. The extent of domestic tourism, however, is likely to be tempered by the slow economy. All things considered, we expect that revenues generated from domestic tourism will be down by about $8bn in 2020 compared to 2019.”
However, for tourism operators, the period ahead would be challenging.
“Among the most vulnerable will be the big names in the airline industry, which are in the process of restructuring their operations,” said the bank.
“Also vulnerable are the 30,000 or so small firms that employ less than 20 people, ranging from accommodation, travel, rental and tour service providers to restaurant operators and bar owners.
“Unfortunately, it is likely that many firms will go out of business, although not as many as would have been the case had it not been for the [Government’s wage] subsidy.”
Most vulnerable would be businesses such as tour guides, bars, restaurants and some accommodation providers.
“Once the crisis has passed, we think it will be these small firms that will lead the recovery,” said Westpac.
“As visitor arrivals start to pick up, new entrepreneurially driven firms, bolstered by cheap money and low barriers to entry, will spring up.”
Key to the eventual recovery would be the efforts of Tourism New Zealand, “which is expected to go into marketing overdrive”.
“Tourists of all ages will eventually return in greater numbers, encouraging more firms to set up shop. Most of these will be small, and many will be niched, much like they were prior to the pandemic,” said the bank.
“After much introspection, cruise ships should also return while hotel occupancy rates are expected to rise. Indeed, long-term, we are picking the industry to look very much like it did prior to the pandemic.”
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