Wednesday Letter: ITOs at risk in last stretch of Covid marathon…

26 Jan 2022  By Contributor

Inbounders are at breaking point but there are reasons to be hopeful, writes Tourism Export Council of New Zealand chief executive Lynda Keene.

I started writing this piece a week ago planning on being forward thinking and seeking optimism in yet a still uncertain environment.

It’s tough out there. The holiday break did nothing to alleviate the mental stress and anxiety that business owners have. The announcement on 24 January 2022 placing New Zealand in the red zone of the traffic light system has stifled my thoughts a bit.

The red zone effectively is the same as a level 3 or level 4 lockdown status. Although the government says Kiwis can still travel and conduct business as usual with some restrictions, the reality is no-one will be travelling for at least two months. This is confirmed by the hundreds of cancellations that ITOs and tourism businesses have had in just 48 hours and Kiwis hunkering down all over the country.

To help businesses survive the next few months, the wage subsidy being re-instated and other targeted funding support businesses are urgently needed. 

This aside, here is what I wrote about the international tourism sector outlook for 2022.

There is still a long way to go. TECNZ expects 2022 will be much like last year with no international visitors until Q4 of 2022 and a lot of uncertainty. If we’re able to get visitors back by mid-year, that would cast a great lifeline for many businesses. Gazing ahead, we think it’s going to be a game of two halves. The first half of 2022 will be quiet as New Zealand manages its way out of the Omicron infection cycle. It’s not going to be easy.

TECNZ chair Scott Mehrtens said, “We have really big concerns for the entire industry. Having come off four months of lockdowns from Aug-Dec then to only have a few short weeks of earning potential from mid Dec to 23 Jan, and now to go into the red traffic light system where it’s basically impossible to run any events or inter-island tourism – it is a recipe for disaster. The international tourism industry is in crisis. Yet again it is the same sectors that are taking the body blows caused by restrictions but this time with no financial support. I really cannot see how some of our members can survive this outbreak ,which is horrific given that they have lasted this long only to tumble in the last stretch of the marathon we have endured. Surely with widespread cases in the community that will no doubt occur with Omicron, the border will no longer pose the same threat so we must be closer than ever to seeing international tourists return to New Zealand. But right now our industry needs urgent support, or this could be the end of the line for so many businesses.”  

Covid-19 Response Minister Chris Hipkins said border changes are possible in the first half of this year.

“The coronavirus will eventually become endemic in New Zealand, and there may be significant changes to the borders in the first half of 2022,” he said.

TECNZ anticipates the second half of 2022 will see the return of international visitors and we wait anxiously to see what details will emerge from the border setting review expected late February.

The visitor economy will continue to face a number of challenges:

• Attracting visitors in a global environment will be highly competitive. We need to ensure Tourism NZ and Inbound Tour Operators are resourced adequately to lead the charge with marketing New Zealand and reconnecting with offshore partners as soon as we get ‘set dates’ to welcome back visitors. The worse thing that could happen is the government reducing TNZ’s international marketing budget, and ITOs can’t hang on until the border reopens. ITOs are needed to contract business back to New Zealand.
• The current restrictions are a major handbrake for businesses. We need to have hope that there are some green shoots and businesses can face the future with some confidence. At the moment, the stringent border restrictions and ever-changing government guidance continue to stifle recovery.
• A number of visitor experiences and infrastructure (accommodation, transport providers, coach and tour operators) will likely have no funds for refurbishment programmes or be able to upgrade fleets, which could in the longer term impact the quality of our visitor offering. 
• Workforce issues and immigration policies continue to affect the tourism industry with no international visitors here on Working Holiday Visas. We hope this can be resolved in the next few months. WHV holders are critical for both the tourism and hospitality sectors.
• Word from China agents is that at this stage there is no outbound travel until 2023. As New Zealand’s second largest market, this is worrying. We’ll keep an eye on things.
• There is widespread concern the government is letting international tourism go. We’d have more confidence in a future if targeted funding assistance was provided for international tourism businesses. We’ll work hard to keep advocating for support. 

Key insights:

• We must up the ante on a campaign that shares why tourism is important to communities and the value of tourism as a career pathway. We need to create stories that rebuild acceptance of tourism and recreate a positive social licence to operate in communities. This is something that is well overdue. It needs to be done as soon as possible so Kiwis warmly welcome back visitors and once again roll-out the amazing manaakitanga we’re globally known for. 
• A key trend that has emerged is the major priorities by prospective travellers, including ’duty of care for visitors’ and refundable cancellation policies. The travel inbound and outbound system has become even more important and will continue to gain prominence over the next few years versus travellers making bookings via OTAs. Make sure you are best friends with ITOs if you have no funds to do international marketing in the next two years and your travel agent for future outbound travel.
• Pre-Covid our industry had an excellent sustainability record and range of achievements. This effort has continued and New Zealand will be well-placed to deliver a strong sustainable visitor offering when travellers return.

Are there any opportunities?

Not at the moment for many international businesses, they are still in survivor mode. Most have reviewed their operations multiple times and adapted to be more nimble and agile. Any further innovations are difficult because balance sheet reserves are depleted. Trying to generate sales out of the domestic market is now taking a back seat for Omicron and keeping staff motivated to stay in the workforce is not an easy task with no certainty of a future.

Whilst most working in the industry had a few moments to refresh and recharge over the Christmas/New Year period, we’ve been pulled back into reality pretty quickly. Mental stress is back on the agenda and we’re mindful this is a critical issue for business owners and employees moving forward. Having key dates for border reopening for visitors and funding support would greatly alleviate some of this stress.

Is there hope?

There is hope. If comments by Covid-19 Response Minister Chris Hipkins can be taken at face value, then perhaps by mid-year New Zealand will be in a position to welcome back visitors. Australian visitors in particular would provide a much-needed boost to support winter destinations and businesses across New Zealand.

We know the demand to visit New Zealand is still high. As a colleague in the UK inbound sector said, “I feel for you guys. Keep strong. The world knows it will be worth the wait to visit New Zealand!” 

We are a resilient industry and will rise again. We’re keen to work with government and develop a plan forward. We offer our expertise to work with you (government) and Tourism NZ to rebuild our world-class visitor economy and be a positive contributor to communities and New Zealand again.  If airlines can secure their routes to New Zealand for the next three years, our sector can attract targeted funding and we let the world know we are open for the 2022-2023 season, we can face the future with a degree of confidence.