Otago’s dependence on international tourists has seen it suffer the most from closed borders, says Westpac. Image: Shutterstock
Otago, Southland and Auckland are the regions hardest hit by the collapse in international tourism, according to Westpac’s latest regional analysis.
But tourism in regions such as Hawke’s Bay and Northland have fared relatively well.
The bank’s January Regional Roundup said the regions most reliant on international tourists are finding it the hardest to recover from the pandemic.
“That includes Otago, which has been hardest hit by the loss of visitor arrivals from abroad and faces the biggest economic struggle of any region in the country,” Westpac said.
“While all regions should benefit from a proposed travel bubble with Australia in early 2021, it’s likely to favour those that have been most affected by the loss of foreign tourist arrivals, such as Otago, Southland, and Auckland.”
By contrast, regions heavy on agriculture and forestry were the strongest performing.
“Some of these regions have also benefitted from the fact that they place very little reliance on foreign tourism,” Westpac said.
“Indeed, some have hardly felt the impact of the closure of the border on foreign visitor arrivals, with an increasing number of Kiwis, put off from going abroad, opting to visit other regions instead.
“Of course, that’s not true for places like Auckland and Otago, which have felt the loss of foreign visitor arrivals more acutely than most.”
Otago continued to be “badly affected” by the country’s closed border.
“The lifting of restrictions on domestic travel has only partially helped to offset this loss and, as a result, Otago has been the hardest hit region in New Zealand,” the bank said.
“The loss of visitor arrivals from abroad has been particularly disruptive for places like Queenstown and Wanaka, with many tourism-related businesses being forced to close. Unemployment in the region has risen sharply as a result.”
Dunedin’s education providers were also missing on out on international students because of ongoing border restrictions.
Otago visitor spending
Economic activity in Otago was expected to improve over the coming year.
“However, given its overweight exposure to international tourism, the province is still likely to remain economically weaker than other regions,” Westpac said.
“That said, Otago will be one of those regions that benefits most from the proposed travel bubble with Australia in early 2021.
“The region is also likely to be among those that benefits most from a gradual lifting of restrictions on travellers from other countries later in 2021, although a return to pre-Covid vibrancy in tourism remains some way off.”
Southland was also heavily affected by the loss of international tourists.
“Tourism has been hard hit by the closure of New Zealand’s borders, with a pickup in spending by domestic visitors falling well short of what is needed to offset a drop in international tourists to the region,” the bank said.
“As a result, many firms in tourist-related industries have found themselves under pressure, with several being forced to close.
“Southland is likely to one of those regions that benefit most from the proposed travel bubble with Australia in early 2021. This will deliver a big shot in the arm to the local hospitality industry, especially if it comes in time for summer, when the region traditionally receives most of its overseas visitors.”
Westpac said the loss of international visitors in Auckland was a “big deal for this major tourism region”.
“The subsequent loss of spending has been felt acutely by firms in tourism-related industries, such as travel services and hospitality, some of which have been forced to close with resultant job losses.
“The situation has been made worse by a significant fall in domestic business travel to the region, as well as the loss of international fee-paying students.”
However, tourism had been relatively strong in the Hawke’s Bay and Gisborne, the country’s best performing region overall thanks to its agriculture sector.
“Tourism activity in the region has been less affected by the closure of New Zealand’s borders than in most other regions,” Westpac said.
“Indeed, a big pickup in spending by visitors from other regions in recent months has helped many small businesses, especially those that rely on the tourist trade, to keep afloat.”
Northland had also seen a pickup in tourism spend.
“Increased spending by domestic tourists has easily offset the loss of international tourism, providing a lifeline for many small businesses in the region.”
Download Westpac’s January Regional Roundup here.
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