Commerce Committee. 2015/16 Estimates Examination. Vote Business, Science and Innovation. Tourism Portfolio
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1 Commerce Committee 2015/16 Estimates Examination Vote Business, Science and Innovation Tourism Portfolio Ministry of Business, Innovation and Employment Responses Supplementary Questions June
2 Commerce Committee 2015/16 Estimates for Vote Business, Science and Innovation (appropriations relating to Tourism) Post-hearing questions for written response ( ) Question 124 What assessment has been undertaken, or is planned, of the extent to which the International Growth Package achieved the expectation that it would be a game changer? The Internationally Focussed Growth Package, announced in Budget 2013, comprised four elements: 1. Science and Innovation investment of $50 million per annum 2. High value international tourism investment of up to $40 million per annum 3. International education investment of $10 million per annum 4. The New Zealand Story investment of $2.0 million for 2013/14. Under element 2 there was to be a total of $151.0 million additional invest ment, over four years, through Vote:Tourism. This was to be allocated as follows: Destination marketing to establish high end positioning in emerging markets with an emphasis on India, Indonesia and South America ($44.5 million) International marketing targeted at the high spending business events market ($34.0 million) Targeting of very high value visitors at the top end of the market who spend considerably more in New Zealand and interact with other premium New Zealand exporters ($20.0 million) Marketing initiatives targeted at high value visitor segments in existing source markets including Japan and China ($24.5 million) Tourism Growth Partnership ($28.0 million). Every year TNZ and the Ministry of Business, Innovation and Employment identify a set of performance measures and targets for inclusion in TNZ s Statement of Performance Expectations. TNZ reports on its performance measures on a quarterly basis to the responsible Minister and in TNZ s Annual Report (see Question 126 below). TNZ utilises data from the tourism core data sets to evaluate the impact of its activity, including information on arrivals, stay days, purpose of visits, visitor demographics, visit timing, single or dual country visits, mode of travel to New Zealand, style of travel once in New Zealand, accommodation type used, companion type, top activity and visitor expenditure. Other data sources from which TNZ gains insight into the effect of its activities include: the Hotel Council data regarding hotel capacity levels; luxury lodge visitor revenue;, super yacht and jet visits; and value of business events and incentives bids. TNZ also conducts and commissions specific research into markets and segments to evaluate the impact of investment to date and inform further investment decisions. This has included research into the Chinese Visitor (in conjunction with MBIE and TIA) and the Chinese Visitor Experience (Waikato University). 2
3 The findings from all of the above sources consistently show that TNZ s activity is generating positive dividends in the areas of emerging markets (India, Indonesia and Latin America), China, High Net Worth Individuals and business events, with good potential for further growth (see the table below). For the year end 30 April total arrivals were up +6.7 per cent, holiday arrivals up +9.7 per cent, and holiday stay days were up per cent. These results were off a strong prior year, making the past 12 months a very good period for the industry. In total there were 2.96 million visitors in the year to end April High level Visitor trends YE March 2015 Visitor arrivals Total stay days Holiday Arrivals Holiday Stay days Total Annual Annual Total Annual Annual Total (m) Total (m) (000s) growth growth (000s) growth growth Priority 1 core markets Australia 1, % % % % China % % % % USA % % % % Priority 2 core markets UK % % % % Germany % % % % Japan % % % % Priority emerging markets India % % % % Indonesia % % % % Latin America % % % % Rest of world % % % % Total 2, % % 1, % % Source: International Visitor Arrivals YE March 2015 Please note where market informaton is unavailable N/A has been written. TNZ s 2014/15 target for the value of conference bids of NZD$85.0 million has been reached and stands at NZD$89.9 million. The win rate remains high at 75 per cent. Incentive bid activity is on track to achieve its annual target of 140, bids with 117 major incentive bids supported this year. Conversion is also on track to achieve its annual target of NZD$25.0 million, with NZD$23.5 million having been secured in 2014/15. In terms of high net worth individuals, Luxury Lodges of New Zealand s 2014/15 revenue data show year-on-year revenue growth of 19.7 per cent. The US remains the strongest market, making up 36 per cent of the overall revenue (a 26 per cent increase). Australia, US, UK, France, Singapore and Hong Kong are all showing double (or triple) digit year-onyear percentage growth An independent operational review of the Tourism Growth Partnership Fund was undertaken in That review concluded that the programme was operating reasonably well though it made some recommendations for improving the quality of applications. MBIE consistently monitors the fund and its recipients, and a formal, independent evaluation of the outcomes of the programme is due to be completed in
4 Question 125 How are the 2015/16 priorities for Tourism New Zealand reflected in the work programme, and how does these differ from the priorities and work programme in 2014/15? The most significant shift in priorities for Tourism New Zealand over the next financial year will be the redirection of marketing activity to drive shoulder season travel (spring and autumn) rather than peak season, in order to smooth out demand. This will result in Tourism New Zealand using paid media and its international media programme at significantly different stages of the calendar year than previously. In addition Tourism New Zealand will increase its focus on sectors and markets that are well aligned with the shoulder seasons, including: Cycling Ski Business events and incentive travel Backpackers Premium Golf India In terms of increasing the supply of tourism services, Tourism New Zealand is working with New Zealand Trade and Enterprise on initiatives to attract investment to the industry so that in the longer term New Zealand has the capacity to cater for greater visitor numbers in the most popular regions. Question 126 The Committee notes that the performance measures for Tourism NZ (pages 97-8 of Estimates) contain numerical targets for 2015/16. - What 2014/15 data is available to provide a baseline on current performance? - How much do the 2015/16 targets represents a continuation of current performance and how much do they represents an altered level of performance? Please find attached Tourism New Zealand s Activity Performance report from Tourism New Zealand s Quarter Three report to the Minister of Tourism (refer annex 1). This includes targets for 22 performance measures and the results for Quarters one, two and three. In 2014/15 Tourism New Zealand achieved and/or exceeded many of its targets. With a comparable level of funding and staffing in 2015/16, Tourism New Zealand has set similar targets and will be aiming to achieve equally high quality results. Question 127 Please provide an update on the current status of: - trails that are either currently completed or are expected to be completed by the end of 2015/16; and - user satisfaction with the trails, either in aggregate or for individual trails (beyond that contained in the 2013/14 MBIE Annual Report). 4
5 Great Ride Update The following Great Rides have been completed: Hauraki Rail Trail fully open Waikato River Trail fully open The Timber Trail fully open Motu Trails fully open Te Ara Ahi fully open Great Lake Trail fully open Mountains to Sea open (though a 12 km section between River Road and Wanganui is currently closed pending re-design, and the recent floods are also likely to have affected this trail). Hawkes Bay Trails fully open Rimutaka Cycle Trail fully open Queen Charlotte Trial fully open Dun Mountain fully open St James Trail fully open Otago Central Rail Trail fully open Roxburgh Gorge Trail fully open Clutha Gold fully open The Queenstown Trail fully open. Stage One only is completed on the following trails: Tasman Great Taste Trail Around the Mountain Trail (due for completion in 2016) and no central government funding is committed to fund Stage Two construction. The following trails are due for completion in the 2015/16 Financial Year: Old Ghost Road (87% complete) West Coast Wilderness Trail (95% complete) Twin Coast Cycle Trail (61% complete). One further trail, the Little River Trail, has been granted Great Ride status, conditional on fully achieving the New Zealand Cycle Trail Design standards. No central government funding has been granted to the Little River Trail. NZ Cycle Trail Survey user experience summary The independent Great Rides trails survey of people using the trails from February to late March 2015 produced the following results: The majority (96%) of users were domestic visitors this number is probably influenced by the timing of the survey 65% of riders are spending up to one day on the trail, 14% two days and 19% more than two days. 98% of riders were satisfied with their trail experience. 93% of riders thought the trail they rode was in good condition. (Condition = a combination of surface/gradient/signage & interpretation) 91% of riders found the level of trail difficulty matched their expectations 97% of riders would recommend the trail network to friends. 5
6 The following responses probably reflect the newness of the trails: 55% of respondents noted little or no easy access to bike shuttles or transport on the trail they rode. 27% noted there was little or no food & beverage service on the trail they rode. 42% noted there was little or no accommodation on the trail they rode. 76% noted there was no guided tour service on the trail they rode. It should be noted that it has taken the Otago Central Rail Trail 20 years to build its tourism infrastructure to the levels enjoyed today. Question 128 Please brief the Committee on progress towards the summer 2015/16 evaluation of jobs and business growth resulting from the trails. When will the results of this evaluation be available to the Committee? The evaluation plan for the 2016 Cycle Trail evaluation is currently being developed. The evaluation will look at economic impacts of the cycle trails through summer 2015/16. The evaluation will be completed in June 2016 and the report is expected to be published later in Question 129 Please provide inflation adjusted data and figures for visitor spending covering the last three years and current year. Year (Year-end March) Inflationadjusted spend (million $) 2012 $6, $6, $6, $8,155 Note: The inflation adjustment base year is 2015 (the latest year). Question 130 We understand hot spots were supposed to be available on the cycle trails. Can you please give us an update on that? Any decision on the availability of hot spots on cycle trails would be made by the governance body responsible for each trail. The provision of hot spots on Great Rides is not a government requirement. 6
7 Question 131 During the hearing, you mentioned that there was an evaluation underway or planned of the Tourism Growth Partnership Fund. Can you please let us know the timelines on that work being completed? Please refer to the response to Question 124 above. 7
8 Annex 1 8
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