Amos Chapple annual report Tourism New Zealand /
11 million visits to newzealand.com from 244 countries 133,200 international fans and media came for the Rugby World Cup 160,000 pass through the Tourism New Zealand Giant Rugby Ball Glacier Southern Lakes
485 participants on familiarisation trips to New Zealand 2,635,726 international visitor arrivals Additional partnership marketing spend of $25 million Fraser Clements
Rob Suisted Contents 01/ Tourism New Zealand Who We Are 02/ Chair s Report 04/ Chief Executive s Report 07/ Governance 09/ Board Members 10/ Executive Leadership Team 12/ Statement of Service Performance 23/ Tourism Outcomes 31/ Equal Employment Opportunities 33/ Financial Statements 66/ Audit Report
Tourism New Zealand has nine offices off-shore, two in New Zealand and 110 staff. Tourism New Zealand is a Crown Agent governed by the Crown Entities Act (CEA) 2004. We were established by the New Zealand Tourism Board Act 1991, to market our country as an international visitor destination for the long term benefit of New Zealand. We aim to improve tourism s contribution to economic prosperity by growing the value of visitors to New Zealand. Our statutory functions under the CEA Act include: Develop, implement and promote strategies for tourism. Advise the Government and the New Zealand tourism industry on matters relating to the development, implementation and promotion of those strategies. As New Zealand s National Tourism Organisation, we are the only entity within our country with the mandate and resources to promote destination New Zealand to potential visitors. Our work is carried out under the umbrella of the 100% Pure New Zealand campaign. The campaign was originally conceived in 1999 and has evolved over the years to communicate the unique experiences available to people who visit New Zealand. While advertising and promotion activity is where we focus many of our resources, our marketing also extends to partnering with international travel sellers and airlines, engaging with New Zealand tourism operators, providing information for visitors, and providing assurance of the quality of New Zealand s tourism product and experience. Tourism New Zealand is governed by a Board of Directors, which delegates day-to-day management of the organisation to the Chief Executive. 01
Chair s Report Kerry PrendERGAST Tourism New Zealand Chair I am delighted to present Tourism New Zealand s Annual Report for the /12 financial year. This past year was my first as Chair and it has been an extremely rewarding experience to play a role in such a significant sector. When I started in August my main objective was to meet our key stakeholders and industry partners; to talk directly with people and hear first-hand of our strengths and weaknesses, and what challenges and opportunities were ahead. Board-to-board meetings were held with Air New Zealand, Auckland Tourism, Events and Economic Development (ATEED), and Auckland International Airport. In April, I joined Chief Executive Kevin Bowler in visiting six New Zealand cities and hosting roadshow updates for the industry before attending my first TRENZ conference New Zealand s biggest annual international tourism event. It was a pleasure to meet with many of you and hear of what you seek from your national tourism organisation. Having listened to your feedback, the Board and I are confident that the strategy in place at Tourism New Zealand will continue to deliver benefit to the industry and the wider economy. There can be no argument that tourism is vitally important to New Zealand it is our second biggest export earner contributing some $6.9 billion pa to our GDP. But the industry has faced some significant challenges this past year. For many of you, it has been more a matter of maintaining the status quo rather than achieving growth. New Zealand-wide, we were confronted with continued economic challenges in Europe and the USA, and their impact on global travel trends. We marked the one-year anniversaries of Christchurch s February earthquake and the tsunami that struck the north-east coast of Japan in March. Both continue to influence visitor arrivals negatively. We have also witnessed the rise of new markets, with significant growth from Asia looking set to out-strip other markets but presenting yield issues, and with most arrivals tending to be short stay visitors. We also have some big competitors working hard to gain an edge. That said, we have some incredible advantages and the strategic approach to leveraging these saw tourism arrivals and stay-days end the year in growth. We have a strong brand and campaign that continues to deliver results. Used for over 12 years, our consistent promotion of 100% Pure New Zealand makes us well understood, recognisable and attractive to our target markets. We have maintained a very high level of visitor satisfaction with visitors to New Zealand rating their holiday experience on average 8.9 out of 10. Having completed two years of its current three-year marketing plan, Tourism New Zealand remains firmly focused on its primary objective: increasing the value of international visitors to New Zealand. Its strategy for the past year was centred on the following priorities. Prioritising markets and sectors for growth A tight focus on those areas that show the greatest potential for return has the organisation prioritising its efforts accordingly. Top tier markets of Australia, our largest source of arrivals, and China, the market showing the most impressive growth figures, received 02
chair s report the greatest attention. Our second tier markets of the USA, UK and Germany reflect the continued importance of traditional long-haul western markets to New Zealand. Attention has also been directed toward identified growth sectors of business events, youth and special interest travel. Focus on preference and conversion Our primary objective is to build preference for a New Zealand visit and convert that preference into actual travel. We have increased our understanding of our target market - the active considerer of New Zealand - and much of our activity now contains a strong digital component enabling us to reach them in an effective and efficient manner. Partnering to improve reach and effectiveness Working in partnership with both private sector and local government was a key focus for the past year and has delivered strong results with an additional $25 million successfully leveraged to invest on marketing destination New Zealand in addition to Tourism New Zealand s government appropriation. We continue to work alongside New Zealand Maori Tourism to ensure all our marketing activity is inclusive of that one element that makes New Zealand truly unique in the world. A closer working relationship with Immigration New Zealand, including two new colocations, has seen improvements to the visa process for a number of visitor markets. We are also working more closely with Education New Zealand and New Zealand Trade & Enterprise to ensure a more unified approach to attracting new investment and new arrivals into the country. Leveraging events was the year we again proved our ability to maximise the attention received from great events. The success of the Rugby World Cup is the perfect example of what can be delivered when everyone works together for a common goal. Actual visitor arrivals at 133,200 significantly exceeded forecasts and Tourism New Zealand s leadership of the visiting international media programme was held in high regard. Supporting the recovery of Christchurch With the one-year anniversary of the February earthquake, we put a lot of effort into getting the message out that Christchurch and Canterbury can offer all visitors a wide range of unique experiences, and that people should continue to build the region into their travel plans. Building organisational capability Over the past year programmes were delivered that continue to support the development of our people. A key development was the completion of the Mission, Vision and Values work that will serve to galvanise the organisation around shared goals and aspirations. I would like to extend my thanks to Kevin Bowler, his Executive Leadership Team and all the staff at Tourism New Zealand for their work over the past year. I would also like to thank my Board for their continued support and in particular, our out-going Board members Glenys Coughlan and Paul Richardson for the invaluable contributions they have made. 03 James Heremaia
Chief Executive s Report Kevin Bowler Tourism New Zealand Chief Executive Ending the /12 financial year with total visitor arrivals up 5.4 per cent on the previous year is a strong achievement in light of the challenges the industry has faced. Visitor numbers of 2.66 million over 12 months were achieved. Total stay days were also up, although not as significantly, by 1.4 per cent for the year. Visitor spend however has remained flat overall despite a 27 per cent increase in expenditure from the Chinese market. The high New Zealand dollar and unfavourable exchange rate has played a significant role in this result. The industry has proven itself resilient over the past 12 months. However, it is also clear that if not for the Rugby World Cup, a far weaker picture could have been painted. The fiscal year ending in June was characterised by some very significant events and the continued impact of events from the year previous. We had the effects of the Christchurch earthquakes in 2010 and to overcome. Then there was the Japanese earthquake and tsunami. And if that was not enough, we had a Chilean volcanic ash cloud that disrupted travel and poor snow to start our ski season. Nature has not been kind. The challenges continued with the on-going effects of the European financial crisis and the unprecedented value being offered to Australian travellers by weaker currencies in Europe and the United States. At a regional level, the grounding of the cargo ship Rena was an unexpected challenge for operators in the Bay of Plenty. Tourism New Zealand worked hard to convey the context of the event to its international audiences, reaffirming that although a significant issue for the local community, travellers to New Zealand would be largely unaffected. As with the earthquakes before, we put a lot of effort into getting the message out that only a small part of the country was impacted, and that visitors should still come. It was also a year of positive events - the most significant of course being the Rugby World Cup, an occasion some five years in the making. We put a lot of emphasis on promoting New Zealand as both a host and destination, particularly through the use of the giant rugby ball. Around 160,000 people viewed the ball, across four off-shore cities and including almost 96,000 people during its installation on the Auckland waterfront. During the six-week Cup event, Tourism New Zealand s primary responsibilities were around making sure the media reported on more than just the rugby. Overall success came in the form of 59 media outlets hosted and some 180 print and television items appearing around the world on destination New Zealand to pay for such publicity could have cost around $28 million. Another event of significance was the visit of the Society of American Travel Writers (SATW) who held their annual convention in Wellington in November. The visit of around 450 travel writers, publicists and associates generated a large volume of print, online and broadcast media coverage of the country. This was a terrific opportunity to showcase the New Zealand visitor experience to such a varied potential visitor audience. The convention was supported jointly by Positively Wellington Tourism, Tourism New Zealand and Air New Zealand. 04
chief executive s report In New Zealand s markets we had Asia going from strength to strength and showing few signs of abating. The Asian economies performed extremely well this past year, with a 33 per cent arrivals increase from China, 35 per cent from Malaysia, 20 per cent from Singapore and 16 per cent from Indonesia. Demand and interest in New Zealand is growing and our focus has been on ensuring we can meet the demand with quality product, adjusted to the needs of source markets. However challenges remain around growing the more valuable mono-destination and Free and Independent Traveller (FIT) sectors from China and ensuring a quality holiday experience is delivered once they are here. Focusing on high growth sectors Over the past year, Tourism New Zealand increased its strategic focus on specific sector marketing looking beyond the country markets that deliver opportunities for growth, and focusing on targeted sector groups as well. In particular, attention was turned to Business Events. We assumed responsibility for the Conference Assistance Programme (CAP) on behalf of the Ministry of Business, Innovation and Employment (MBIE) and converted five successful conference bids, a promising start. We introduced a new campaign for business events and are working more closely with the industry to achieve growth in the number of international meetings, incentives, conferences and events hosted in New Zealand. The youth market became another key focus. Travellers aged 15-29 make up a quarter of all arrivals into New Zealand and tend to be high value. As a group they stay longer than the average visitor, travel and spend across the regions and are more likely to return bringing others with them. The roll-out of our Stories beat Stuff on-line campaign is based on the idea that personalised recounts of a New Zealand holiday will motivate others to travel here. The entirely digital and social media campaign has exceeded all expectations and is providing a significant base of shared stories that can be used to promote unique experiences to a wider audience of potential young travellers. Partnerships are critical to our success Strong and effective partnerships are essential to our strategy, and remain vital to meeting our goals. Our experience has shown that a partnership approach in campaign investment can increase our performance and reach. In particular, our key strategic partnership with Air New Zealand continued to deliver results over the year for each of us. Our joint venture campaigns in China and the USA in particular and complementary use of Opinion Leaders has helped maximise advertising investment, increase trade and consumer engagement for both partners, and drive referrals through social media. In our conversations have been heavily focused on how we are partnering around The Hobbit to maximise visitor outcomes for New Zealand. This past year has provided solid evidence of the success that can be achieved in growing air capacity when a partnership approach is taken. China Southern Airlines have gone from strength to strength, moving to a daily service between Guangzhou and Auckland in November, just six months after entering the market in April. The huge increase in visitor numbers we saw out of Malaysia with the arrival of Air Asia X direct from Kuala Lumpur to Christchurch demonstrates there is demand in the region to be tapped into. Sadly, matters beyond our control continue to have a great influence on the future of some routes and the Air Asia X service could not be sustained. We look forward to the coming year and working alongside Hawaiian Airlines and Garuda International both of whom have indicated plans to enter the New Zealand market. At a regional level, we have been working more closely with the Regional Tourism Organisations, having taken the approach of supporting fewer but larger, more synchronised and consumer driven campaigns with multiple partners. The first of these The South Island Road Trips - was one of the most significant trans- Tasman promotions of and was born out of a need to ensure the South Island remained a popular tourist destination for Australians, post the earthquakes. It was undertaken in association with Christchurch and Canterbury Tourism, Destination Queenstown, Lake Wanaka Tourism, Tourism Dunedin and Christchurch International Airport along with a number of New Zealand and Australian based travel trade. The campaign surpassed all online targets generating over 160,000 visits to newzealand.com and over 43,000 referrals to travel sellers. The success of this campaign will see more of this style replicated in other markets. Digital marketing remains a core focus Digital media channels are vitally important to TNZ s strategy: they enable us to reach a large and targeted international audience and engage with people considering a visit to New Zealand. newzealand.com is still the centrepiece of our marketing and all campaigns send visitors to the website. It is a key place for people to be informed and inspired about our country. June saw the launch of the latest evolution of newzealand.com creating a market place where people seeking a tourism product could link directly to those 05 05. 06
chief executive s report selling one with the site serving to convert the potential into actual. There are 16 editions of the site in five languages. Over the past year we listened to what users and the industry told us about the site, conducted significant user testing on improvements and continued to make changes. We ended the /12 year with site visitor numbers remaining steady but those who do visit being more engaged, viewing more pages and returning more often. Referrals direct to our partners are up 13 per cent on the year before a key success for the site. newzealand.com will continue to evolve over the coming year as we seek to continually improve its performance. For many of our active considerers, people already considering New Zealand for a holiday, social media is a key channel for reaching them. The ability for visitors to share their personal stories over social media also presents a huge new opportunity that we leverage in our digital marketing activity. The use of Facebook and Twitter is significant for us and it is about driving traffic back to newzealand.com where there is more exposure to operators and travel sellers. Over the past year, through targeted fan acquisition, the 100% Pure New Zealand social channels have acquired 250,000 new fans to reach a total fan base of 713,065. This increased fan base now allows our content to fuel nearly 500,000 social media stories in Facebook alone with top posts reaching 300,000 unique people. Operations At an operational level, a focus on back-office cost reductions saw us achieve a 15 per cent saving. We reconfigured the layout of the Wellington office, reducing the space required and sub-letting the rest. We also closed smaller outposts in Christchurch and Hong Kong. In other locations we have sought to share office space with other NZ Inc. agencies where appropriate. We completed a thorough audit of our global IT systems and providers, with subsequent changes resulting in a $1 million saving in IT and telecommunications expenses and delivering improved services to staff. More development is planned that will no doubt improve efficiencies further. We have moved to an enhanced IT product suite that includes instant messaging, desk top video over IP, a new application for global document management and in the year ahead, a new customer relationship management system. Acknowledgements I would like to add my thanks to all the team at Tourism New Zealand for their hard work over the year and commitment to excellence. Our people consistently demonstrate an unwavering belief in New Zealand, an innovative approach to their work, a drive for results and a global sense of community in a manner that defines this organisation. I would also like to thank Board members both past and present for their on-going support and in particular our new Chair Kerry Prendergast. The coming year is already shaping up to be an exciting one for the industry with the first of the highly anticipated Hobbit films being released and Wellington the host for the global premiere. Our 100% Pure New Zealand campaign is still going strong and I am confident that with a collaborative and targeted approach to marketing New Zealand tourism, we will continue to see positive results for the industry. 06 Chris Sisarich
Governance The Board The New Zealand Tourism Board (trading as Tourism New Zealand) is a Crown entity established under the New Zealand Tourism Board Act 1991 and is a Crown agency for the purposes of the Crown Entities Act 2004. Tourism New Zealand is governed by a Board appointed by the Minister of Tourism. All decisions relating to the operation of Tourism New Zealand are made by, or under the authority of, the Board in accordance with the New Zealand Tourism Board Act 1991, and the Crown Entities Act 2004. In accordance with the New Zealand Tourism Board Act 1991, the Board must have no fewer than five, and no more than nine, members. The Minister s formal line of accountability with Tourism New Zealand is through the Board s Chair. Board appointments are generally for two or three years, with reappointment possible. The composition of the Board reflects a balance of tourism industry and commercial expertise. The Board meets at least six times a year, including a two-day meeting to review the organisation s ongoing strategic direction. This strategy meeting initiates the business planning process and informs the preparation of the annual Statement of Intent. Delegation The Board delegates day-to-day management of Tourism New Zealand to the Chief Executive who is directly accountable to the Board through the Chair. Tourism New Zealand s Delegated Authorities Policy is set by the Board and reviewed annually. Appropriate formal processes are in place for reporting back to the Board. Induction and Development Tourism New Zealand introduces each new board member to the organisation through an induction process which includes time spent with senior executives and their teams. Members are also encouraged, where appropriate, to attend tourismrelated events such as TRENZ. Conduct Tourism New Zealand expects all its employees and board members to maintain the highest ethical standards. Tourism New Zealand has in place an employee code of conduct which all staff sign on joining the organisation. Tourism New Zealand also has a formal code of conduct for its board members, which is consistent with the code released by the State Services Commission. Disclosure of Interests The Board is conscious of its obligations to ensure that board members avoid any conflicts of interest in their decision-making process. The Board ensures that proper process is followed and that members interests are formally recorded, with any changes or additions being disclosed at the start of each meeting. Members excuse themselves from any discussions in which their duty as a member could be compromised. Risk Management Tourism New Zealand manages its risks through a risk management framework; a process that requires it to identify legislative and business risks arising from its strategic direction and operating environment. Tourism New Zealand s risk management policy is reviewed annually by the Audit Committee. The Chief Executive reports to the Board on the matter of new or escalated risks and the processes in place to manage these appropriately. Tourism New Zealand conducts its own internal audits, often with the involvement of its external auditors. Audits are agreed by the Audit Committee and programmes of work are developed with input by the external auditors. The results are reported back to the Audit Committee. 07
governance Board Committees Committees of the Board are convened to deal with specific matters and currently include the Audit Committee and Remuneration Committee. The Audit Committee meets at least three times a year. It reviews Tourism New Zealand s internal control framework, external audit relationships and engagements, risk management and financial reporting, including the New Zealand equivalent to International Financial Reporting Standards (IFRS). The Remuneration Committee meets on a quarterly basis or more as required. It reviews the performance and remuneration of the Chief Executive and senior management. The committee also approves proposed organisation-wide remuneration policies. Subsidiary Companies Tourism New Zealand has a controlling interest in two subsidiary companies: a 60 per cent shareholding in Qualmark New Zealand Limited, and, (through the terms and conditions of a relationship agreement that meets the criteria determined in NZ IAS 27 for consolidating investments in subsidiaries), the Visitor Information Network Incorporated, trading as i-site New Zealand. Three of Tourism New Zealand s Executive Team, including the Chief Executive, are directors of Qualmark. Tourism New Zealand appoints three members to the i-site New Zealand Board, including one Tourism New Zealand executive member. The Board of Tourism New Zealand is provided with financial information from each organisation at each board meeting, as well as commentary on performance and significant issues. The Board would like to thank immediate past members Greg Muir, Glenys Coughlan and Paul Richardson who retired this past year. 08 Fraser Clements
board members Board Members Kerry PrendERGAST Chair Kerry was appointed as Chair of the New Zealand Tourism Board on 15 August for a three-year term. She is the former Mayor of Wellington and former Vice-President of Local Government New Zealand. She holds an MBA specialising in Marketing and Strategy. Kerry is currently Chair of the Environmental Protection Authority, the New Zealand International Arts Festival Trust, and the Wellington Jazz Music Festival Trust. She is also a Director of Kirkcaldie & Stains and is a Trustee of the New Zealand Community Trust. Malcolm Johns Deputy Chair Malcolm is Chief Executive of Intercity (NZ) Limited, parent company of InterCity and Newmans Coach Lines, Great Sights, Fullers Bay of Islands, Kings Dolphin Cruises and Eco Tours. Malcolm has extensive commercial experience having held senior roles with Discover Canada Holidays, Jasons Travel Media, Tourism Holdings and Hyatt International Hotels and Resorts. Malcolm was reappointed to the New Zealand Tourism Board on 8 October 2010 for a second three-year term. Henry van Asch Henry co-founded AJ Hackett Bungy with business partner AJ Hackett before founding Bungy New Zealand in 1997, where he remains a director. Henry oversees ownership and operation of the Bungy New Zealand (which includes AJ Hackett Bungy and Auckland Bungy & Bridge Climb) along with his latest ventures: the High Plains Wine Co and The Winehouse & Kitchen Restaurant. Henry was appointed to the New Zealand Tourism Board on 1 September 2008. In August he was appointed to a further term which expires in April 2014. NB: Greg Muir was Chairman of the New Zealand Tourism Board until August. He was replaced by Kerry Prendergast. Glenys Coughlan was a member of the New Zealand Tourism Board until her second term expired in April. Paul Richardson was a member of the New Zealand Tourism Board until resigning to take up an offshore role in June. In August the pair were replaced on the New Zealand Tourism Board by John Thorburn and Jenn Bestwick. John Barrett Jennie Langley Richard Leggat John is Managing Director of Kapiti Island Alive and Kapiti Nature Lodge, a family ecotourism operation based on Kapiti Island. He is currently Chairman of the Wellington Regional Maori Tourism organisation, Te Ara a Maui. He also sits on the Boards of the Aviation, Tourism and Travel Training Organisation (ATTTO) and a number of non-tourism related organisations. John was reappointed to the New Zealand Tourism Board on 1 February 2010 for a second three-year term. Jennie was appointed Independent Chair of the New Zealand Hotel Council (NZHC) in 2007, after four years as Chief Executive Officer. She is a director of her consultancy company, J L Associates Ltd, and a member of the Biosecurity Ministerial Advisory Committee. Jennie has previously held roles as a director of Positively Wellington Tourism, the New Zealand Wool Board, Opus International Consultants and has served as a local government councillor in Hawke s Bay. Jennie was appointed to the New Zealand Tourism Board in 2009 for a three-year term. In August she was appointed to a further term which expires in April 2014. Richard has a varied background across business, marketing and e-commerce. He is currently employed in a sales and marketing role for a leading provider of e-commerce solutions. Richard is the chairman at BikeNZ, the organisation that supports the development of cycling in New Zealand and is on the Board of New Zealand Post. He is also a founding committee member of the Eating Disorder Association of New Zealand and chaired the Parnell District School Board of Trustees until Decmber. Richard was appointed to the New Zealand Tourism Board on 1 February 2010 for a three-year term. 09
executive leadership team Executive Leadership Team Kevin Bowler Chief Executive As Chief Executive Kevin has responsibility for the delivery of the organisation s strategy. His marketing and business leadership experience spans fast moving consumer goods, technology, and media brands in New Zealand and overseas. Prior to joining Tourism New Zealand in early 2010, Kevin was CEO for start-up Yahoo!Xtra. Gregg Anderson General Manager Western Long Haul Markets Gregg oversees Tourism New Zealand s strategy and activities in the markets of North America and Europe. His teams, based in London and Los Angeles, deliver trade marketing, consumer marketing and international PR activities. Gregg has spent over 17 years in regional management and marketing roles in Tourism New Zealand offices. Catherine Bates General Manager Brand and International PR Catherine is responsible for the integration of Tourism New Zealand s brand, international PR and marketing insights. She also leads www. newzealand.com, Tourism New Zealand s consumer travel website. Catherine has worked for Tourism New Zealand for 17 years. Tim Burgess General Manager Australia Tim oversees Tourism New Zealand s strategy and activities in Australia. His team delivers trade marketing, consumer marketing and international PR activities in this market. Tim joined Tourism New Zealand from Tourism Bay of Plenty where he was General Manager. Tim previously worked with Tourism New Zealand as its Media Planning Manager from 2000 to 2005. Tony Everitt General Manager Asian Markets Tony rejoined Tourism New Zealand in April, and is responsible for the leadership and management of Tourism New Zealand s Asian operations. His team delivers trade marketing, consumer marketing and international PR activities in these markets. Tony has had an extensive career in tourism most recently as the Chief Executive of Destination Queenstown. Rose Ford General Manager Human Resources Rose joined in April and is responsible for developing and implementing the organisation s human resources management strategy. Her team delivers recruitment, capability development and talent management, remuneration and reward initiatives and performance management. Rose joined Tourism New Zealand from AXA and her career has included senior HR and leadership roles in New Zealand and the United Kingdom. 10
board members / executive leadership executive team leadership team Executive Leadership Team Sue Parcell General Manager Finance and IT Sue is responsible for managing and leading the financial and accounting functions of Tourism New Zealand, while also managing the IT infrastructure. She also oversees the strategic planning and reporting function. Sue has had considerable experience in the tourism industry including senior finance and general management roles. Justin Watson General Manager Marketing Communications Justin manages Tourism New Zealand s consumer marketing and advertising activity. He also oversees Tourism New Zealand s business development activities which include trade marketing, conferences and incentives, cruise and airline partnerships. Reporting to Justin are specialist teams working from New Zealand and offshore offices. Paul Yeo General Manager Tourism Operations Paul oversees the organisation s industry and trade relationships, infrastructure and quality covering Qualmark, i-sites and the China Market Development Unit, which monitors the quality of services provided to the Chinese Tour market. NB: Tourism New Zealand s General Manager Public Affairs left in March. This role, and that of General Manager Tourism Operations were combined and Chris Roberts was appointed to the new position of General Manager Corporate Affairs, in July. 11 Fraser Clements
STATEMENT OF SERVICE PERFORMANCE Statement of Service Performance - / Overview This report covers The New Zealand Tourism Board s (trading as Tourism New Zealand) service performance for the year ending 30 June against the forecast statement of activities, performance measures and standards set out in Tourism New Zealand s Statement of Intent -14. Tourism New Zealand s resource allocation decisions were based on the extent to which each proposed activity would contribute towards the delivery of outputs and outcomes described in the Statement of Intent -14. In /12, Tourism New Zealand s activities were funded primarily from one appropriation within Vote Tourism. tourism new zealand funding Appropriation 1: Marketing of New Zealand as a Visitor Destination Crown Revenue $93,931 $83,861 $83,861 Other Revenue 1 $6,719 $3,089 $5,669 Total Expenses 2 $100,547 $86,950 $89,632 Appropriation 2: Marketing of New Zealand as a Visitor Destination through Joint Ventures Crown Revenue $5,000 $0 $0 Expenses $4,983 $0 $0 Appropriation 3: Implementation of the Tourism Strategy Crown Revenue $430 $0 $0 Expenses $430 $0 $0 Other Crown Revenue: Conference Assistance Fund 3 Crown Revenue $0 $0 $354 Expenses $0 $0 $354 Total Revenue 4 $106,080 $86,950 $89,884 Total Expenses $105,960 $86,950 $89,986 Actual Budget Actual 1 Other revenue includes bank interest, partner revenue, excludes foreign exchange gains. 2 Total expenses include use of retained earnings, excludes foreign exchange losses. 3 Responsibility and funding for the delivery of the Conference Assistance Programme fund (CAP) was transferred to Tourism New Zealand in /12 by the Ministry of Economic Development (now the Ministry of Business, Innovation and Employment) 4 The difference between Budget and Actual revenue and expenditure is due to higher than budgeted revenue from joint venture partnerships. 12
STATEMENT OF SERVICE PERFORMANCE Output Class Performance In /12, Tourism New Zealand delivered the following five output classes: 1. Marketing 2. Working with overseas travel trade and airlines 3. Informing, and engaging with, New Zealand s tourism industry 4. Information for visitors, and 5. Quality assurance These output classes were funded primarily through Appropriation 1: Marketing of New Zealand as a Visitor Destination. Appropriation 1: Marketing of New Zealand as a Visitor Destination output class funding Output Class 1: Marketing $56,157 $58,965 Output Class 2: Working with overseas travel trade and airlines $6,362 $5,793 Output Class 3: Informing, and engaging with, the NZ tourism Industry $739 $809 Output Class 4: Information for visitors $3,059 $3,500 Output Class 5: Quality assurance $505 $365 Other Crown Revenue: Conference Assistance Fund Output Class 3: Informing, and engaging with, the NZ tourism Industry $0 $234 New Zealand and Offshore Support Costs 1 $20,128 $20,320 Total $86,950 $89,986 Budget Actual 1 New Zealand and Offshore Support Costs support the delivery of all five outputs. 13
STATEMENT OF SERVICE PERFORMANCE Output Class 1: Marketing Marketing is Tourism New Zealand s largest output expenditure. Tourism New Zealand delivers a range of marketing outputs which broadly fit into the categories of campaign and market research. Campaign The implementation of Tourism New Zealand s three-year marketing strategy in 2009/10, shifted focus away from raising awareness of New Zealand through predominately mass media advertising campaigns, towards reaching people actively considering New Zealand as their next holiday destination and converting them into actual visitors. Activity primarily uses advanced digital marketing tools such as; investing in paid search engine advertising, optimising online search results, and developing and running online display campaigns. Tourism New Zealand has an increased focus on joint venture activity with industry partners. Joint venture marketing enables Tourism New Zealand s messaging to be packaged with something potential visitors can buy, extending marketing reach through matched funding, and expanding and maintaining air capacity from key tourism markets. Communication channels such as international public relations (PR) deliver brand messages through third parties (e.g. opinion leaders, media) to contribute to New Zealand s popularity and accessibility as a destination and to strengthen conversion. Digital, PR and trade activity is integrated to improve the synergy and effectiveness of our campaign delivery. Market research Market research activities focused on providing core intelligence and evaluation input into the development of marketing campaigns. 14
STATEMENT OF SERVICE PERFORMANCE Output Class 1: Marketing Campaign Quantity measures Performance Status Australia campaign activity Target: 8 partnered, 4 digital, Search Engine Marketing always on China campaign activity Target: 6 partnered, 2 digital, Search Engine Marketing always on USA campaign activity Target: 5 partnered, 2 digital, Search Engine Marketing always on UK campaign activity Target: 4 partnered, 2 digital, Search Engine Marketing always on Germanic Europe campaign activity Target: 4 partnered, 2 digital, Search Engine Marketing always on Japan campaign activity Target: 6 partnered, 2 digital, Search Engine Marketing always on Partnership funds committed to coordinated marketing activity Target: Regional Tourism Organisation (RTO) partnerships $1:$1 Aviation partnerships $1:$1 PR impressions in print and broadcast in TNZ markets Target: Amount of quarterly coverage received; broadcast (minutes), print (number of pages). Baseline data to be collected in FY12 Active Considerers associate NZ with key brand attributes of popularity, fun and making NZ seem more accessible Target: 60% key messages included in print and broadcast outputs Equivalent advertising value (EAV) of print and broadcast in TNZ markets Target: Amount of quarterly EAV received; broadcast and print coverage ($NZD). Baseline data to be collected in FY12 22 partnered, 15 digital campaigns delivered Search Engine Marketing: Always on 6 partnered, 3 digital campaigns delivered Search Engine Marketing: Always on 9 partnered, 2 digital campaigns delivered Search Engine Marketing: Always on 5 partnered, 4 digital campaigns delivered Search Engine Marketing: Always on 4 partnered, 3 digital campaigns delivered Search Engine Marketing: Always on 8 partnered, 4 digital campaigns delivered Search Engine Marketing: Always on Ratio: RTOs: $1:$0.5 Aviation: $1:$1 Financial contributions received from partners: $13.97m Non-financial contributions received from partners: $2.18m Broadcast: 1045 minutes Print: 1220 pages 89% of print and broadcast outputs included key messages Broadcast and Print: $74m 1 Achieved Achieved Achieved Achieved Achieved Achieved Partially achieved (see comment below) Benchmarking data collected Achieved Benchmarking data collected 1 Does not capture EAV from US broadcast projects Comment: A campaign targeting Australian visitors was delivered in partnership with a number of Regional Tourism Organisations (RTO). The South Island Road Trip campaign was particularly successful and led Tourism New Zealand to increase its level of funding. This led to the RTO partnership funding ratio not being maintained. 15
STATEMENT OF SERVICE PERFORMANCE Output Class 1: Marketing Campaign Cost effectiveness measures Performance Status Cost Per Acquisition: online display Target: Australia $3-$3.50 China $1.00-$1.50 North America $8.00-$10.00 UK $3.00-$3.50 Germany $5.00-$5.50 Japan $5.50-$6.00 Australia: $5.10 China: $1.25 North America: $11.10 UK: $9.05 Germany: $6.75 Japan: $3.62 Partially achieved (see comment below) Cost Per Acquisition: online search Target: Australia: $1.50-$2.00 China $0.50-$1.00 North America $3.50-$4.50 UK $0.50-$1.00 Germany $1.50-$2.50 Japan $2.00-$3.00 Australia: $1.88 China: $0.68 North America: $2.32 UK: $1.35 Germany: $1.38 Japan: $1.85 Achieved Campaign Return on Investment (ROI) 2 ($Spend: $Value generated) Target: Baseline data to be collected in FY12 Australia: 1:20 ROI from 1 campaign China: China JV and Partnership development 1: 32.8 North America: 1:14.5 average ROI from 4 campaigns Japan: 1:6.7 average ROI from 5 campaigns Benchmarking Data collected Comment: A number of factors attributed to the Cost Per Acquisition targets for online display advertising not being met in some markets. These include: - UK, increased costs associated with sponsoring a popular travel website. While the activity was more expensive it delivered a more targeted user and a more engaging format for our brand message. - Australia, Tourism New Zealand purchased high-reach placements to raise awareness such as the front page of the online Sydney Morning Herald, which generated mass awareness and impressions at a higher overall Cost Per Acquisition. - Germany, the use of rich media placements to provide a more interactive format for brand communications with the goal of driving interaction rather than a straight click to newzealand. com, which it delivered above target. - North America, Cost of acquisition from display was above target due to the heavy use of rich media placements, primarily during Q2, which were used to support the launch of three video ads and delivered an interactive experience within the rich media placement. A click to newzealand.com was not the primary success metric for these placements. 2 ROI is calculated by: (passengers booked) x (average visitor spend for market) / campaign spend. This generates a ratio that shows for every dollar we spent we generated x amount of value. ROI can only be provided on partnered campaigns where Tourism New Zealand has a line of sight through to bookings. ROI relates to campaign spend only and is not a measure for Tourism New Zealand activity at an outcome level. 16
STATEMENT OF SERVICE PERFORMANCE Output Class 2: Working with the overseas travel trade and airlines Travel trade training and trade events Deepening travel seller capability to sell New Zealand as a destination is an important way of driving more conversion of visitors to New Zealand. Tourism New Zealand deliver a range of training outputs aimed at enabling overseas travel sellers to more effectively sell destination New Zealand to potential visitors in their market. Training is provided using a variety of approaches, including: face to face and online training to the travel trade through newzealand.com/travel/trade, familiarisation experiences to overseas travel sellers, and maintaining and updating Tourism New Zealand s travel trade website. Tourism New Zealand also organises travel trade events and co-ordinates participation by the New Zealand tourism sector at international trade shows. Output Class 2: Working with OVERSEAS travel trade and airlines Travel trade training and trade events Quantity measures Performance Status Successful travel module completions Target: 12,500 Face to face trainings delivered and number of participants trained Target: 200 delivered 6,500 participants Webinars delivered and number of participants trained Target: 50 delivered 2,000 participants Trade on TNZ hosted famils Target: 160 Famils that feature a cultural element Target: Benchmarking year Trade events attended by TNZ Target: Minimum of 10 Trade events organised and facilitated by TNZ Target: Minimum of 5 People confident or very confident in selling destination NZ after TNZ trade training Target: 90% People confident or very confident in selling destination NZ after TNZ trade event Target: 85% 14,272 travel modules completed Achieved 137 delivered 6891 participants 17 delivered 1147 participants Substantially Achieved Not achieved (see comment below) 486 hosted Achieved 26 famils out of 42 included Maori tourism product Benchmarking data collected 33 attended Achieved 11 organised/facilitated Achieved 97.8% confident or very confident Achieved 99.5% confident or very confident YTD Achieved Comment: Due to an overuse of webinars in Europe, Tourism New Zealand decided to shift focus away from webinars and increase the emphasis on face to face training. In North America, technical difficulties delivering webinars led to a review of how webinars are delivered. Following the review, an increase in the number of participants trained was observed in the second half of the year, however, the annual target was not achieved. 17
STATEMENT OF SERVICE PERFORMANCE Working with the aviation sector Tourism New Zealand maintains agreements with aviation and airline partners, and also seeks out new agreements where they are in accordance with Tourism New Zealand s aviation strategy. Under these agreements, partnered marketing campaigns are delivered that support aviation routes critical to maintaining and developing tourism. Output Class 2: Working with overseas travel trade and airlines Working with the AVIATION sector Quantity measures Performance Status Partnership funds committed to coordinated marketing activity Target ratio: Aviation partnerships $1:$1 Ratio: Aviation: $1:$1 Financial* contributions received from partners: $13.97m Non-financial* contributions received from partners: $2.18m Achieved *Note: Financial and non-financial contributions include partner contributions from non-aviation partners. Output Class 3: Informing, and engaging with, New Zealand s tourism industry Publications, websites and engagements Tourism New Zealand informs and engages with the New Zealand tourism industry, by helping the industry maintain a good understanding of changing markets, Tourism New Zealand s strategy, and key opportunities around selling the New Zealand tourism product and brand effectively. Tourism New Zealand promotes a collaborative industry approach to achieving industry outcomes. Key outputs include: - Publications, including the regular delivery of Tourism News e-bulletins, and the Annual Report. - The corporate website (tourismnewzealand.com) which provides the industry timely information on recent activity through media releases, information on events, tourism source markets, Tourism New Zealand campaigns and objectives. - Speaking engagements, including presentations at conferences and seminars that update members on changes within the global industry and the specific consequences this will have within the New Zealand tourism market. These speaking engagements also allow Tourism New Zealand to hear from the industry including any challenges they are facing or opportunities they have identified. 18
STATEMENT OF SERVICE PERFORMANCE Output Class 3: Informing, and engaging with, NZ tourism industry PuBLICATIONS, Websites and engagements Quantity measures Performance Status E-bulletins published quarterly Target: 6 per quarter Average number of total visits to tourismnewzealand.com per month Target: Maintain monthly average of 24,000 Average time spent per person on tourismnewzealand.com Target: Maintain over 2mins and 30secs Open rate of e-bulletins Target: Maintain over 30% Stakeholders consider engagement valuable Information for visitors Target: 95% rate engagement as 3 or higher on a 5 point scale 14 published Not achieved (see comment below) Monthly average: 26,652 Average time spent on site: 2mins and 35 seconds Achieved Achieved 34% open rate Achieved 96% of stakeholders who responded to surveys rate engagement as valuable Achieved Comment: During Q1, Tourism New Zealand decided to reduce the frequency of e-bulletins from fortnightly to monthly while a review of this communication was undertaken. Following the review, the decision was taken to reduce the number of e-bulletins to monthly on a permanent basis. Output Class 4: information for visitors Tourism New Zealand s activities within this output class include utilising newzealand.com, Tourism New Zealand s consumer website, to connect and engage with potential visitors to NZ and ensuring that i-sites meet the quality standards that are a membership requirement. Websites (newzealand.com) Tourism New Zealand s consumer website, newzealand.com performs a dual role. As a marketing tool the website is used to convert Active Considerers preference for New Zealand into actual travel and secondly, the site has a role to enable visitors to engage with one another and with travel sellers to source information and advice. 19
STATEMENT OF SERVICE PERFORMANCE Output Class 4: Information for visitors Websites (newzealand.com) Quantity measures Performance Status Average number of total visits to newzealand.com per month 3 Target: FY12 monthly average: 1.35m Q1 target: 2.59m (monthly average of: 864,000); Q2 target: 4.86m (monthly average of: 1.62m); Q3 target: 5.18m (monthly average of: 1.73m); Q4 target: 3.56m (monthly average of: 1.19m) 906,064 average monthly visits Not achieved (see comment below) Comment: Visits to newzealand.com were down against targets as Tourism New Zealand marketing activity, primarily in China, drove more paid digital traffic direct to partner sites rather than newzealand.com. Over the year, directing traffic direct to partner sites was a conscious decision by TNZ in part while newzealand.com was upgraded and also to take advantage of partnership opportunities. i-site i-site New Zealand is a subsidiary of Tourism New Zealand, governed by a Board of Directors (three of whom are appointed by Tourism New Zealand). The subsidiary is the owner of the i-site brand and livery. Tourism New Zealand provides staff, support services, business systems, training to local i-site network staff and marketing for the i-site network. Tourism New Zealand does not hold an ownership stake in any i-site centre. i-site New Zealand has established the membership standards that individual centres must achieve to use the i-site brand, and become a part of the network of centres. These standards are enforced by site inspections of the centres by i-site staff. Output Class 4: Information for visitors i-sites Quantity measures Performance Status i-sites assessed against network membership standards Target: 100% (all 91 i-sites are assessed) Level of user satisfaction with i-site Target: At or above 9.0/10 59 (65%) i-sites assessed Note: Agreement reached with Qualmark to assess 100% of i-sites during the calendar year as this is the period of the Qualmark Licence Holder Agreement i-site user satisfaction: 8.7/10 On track Not achieved (see comment on pg21) 3 As campaign activity seeks to drive visits to newzealand.com, it is expected more visits will be achieved when TNZ is heavily active in market. To reflect when TNZ s periods of high campaign activity are, quarterly targets for visitation to newzealand.com have been developed to show how the full year visits target will be achieved across the quarters. 20
STATEMENT OF SERVICE PERFORMANCE Comment: Currently, use of i-sites collectively is declining, partly due to a drop in arrival numbers from long haul Western markets who have historically been high users of i-sites. In addition, tourists are not using i-sites to book as often, possibly due to improved online booking access including smart phones, and are increasingly using them to simply collect information before making bookings direct. These trends are predominantly outside the ability of i-site to influence and may be impacting on the level of satisfaction of the i-site product. Overall satisfaction with i-sites in /12 was 8.7/10. This compares to a score of 8.6/10 for the same period in FY11. These results confirm that the goal of 9.0/10 is a challenging target. Output Class 5: Quality assurance Qualmark Qualmark New Zealand Ltd is a jointly owned subsidiary of Tourism New Zealand (60 per cent) and the Automobile Association of New Zealand (40 per cent). Tourism New Zealand provides funding, governance and some marketing support for Qualmark. Qualmark provides quality assurance services to around 2,300 New Zealand tourism businesses by providing a star grading system for a range of different categories including accommodation and venues, and an endorsement system applied across five categories including activities, transport, tour operators, visitor information centres and services. Qualmark also gives recognition for excellence in environmental business practice through Enviro accreditation. Output Class 5: Quality assurance Qualmark Quantity measures Performance Status Annual number of Qualmark licences held 4 Target: Average over 2,300 Qualmark licensees satisfaction with Qualmark service/programme Target: Qualmark licensees satisfaction: 65% Satisfaction of visitors who used Qualmark services compared to non-qualmark services Target: Maintain at or above 9.0/10 and above satisfaction levels of non-qualmark users Average: 2260 licences held Qualmark licensees satisfaction: 48% Qualmark users satisfaction: 9.0/10 non-qualmark users satisfaction: 8.9/10 Partially achieved (see comment below) Not achieved (see comment below) Achieved Comment: Average Qualmark licences trended down slightly throughout /12, a direct result of Qualmark initiated licence cancellations due to standardised debtor collection practices. There is also an underlying lack of perceived value and return on investment by some licensees that is a key objective for Qualmark to overcome. The result was also impacted by the ongoing effects of the earthquakes in Christchurch in 2010 and. This lack of perceived value is likely reflected in the Qualmark licensees satisfaction with the Qualmark programme. However it is worth noting that while the target was not met, only 15 per cent of licensees were dissatisfied with the programme with a further 37 per cent not having a firm opinion. Positively, 74 per cent of licensee s considered that Qualmark was important to their business. 4 KPI wording amended from annual number of Qualmark licence holders to licences held, to clarify that Tourism New Zealand are counting number of licences held not licence holders. 21
STATEMENT OF SERVICE PERFORMANCE Approved Destination Status (ADS) The Chinese tourist market has particular quality issues that require attention. The China Market Development Unit (previously the Approved Destination Status Monitoring Unit), operated by Tourism New Zealand, licenses New Zealand-based Inbound Tour Operators that cater for the Chinese market, and monitors their conduct, performance and quality standards. The China Market Development Unit assesses new applicants, completes regular compliance monitoring and assessments, and handles complaints and feedback from Chinese Tour visitors. Output Class 5: Quality assurance Approved DESTINATION Status (ADS) Quantity measures Performance Status Number of ADS spot checks and mystery shopped operators Target: 150 spot checks 20 mystery shops 71 spot checks 5 Mystery Shops Not achieved (see comment below) Timeliness measures Performance Status New ADS applications processed within timeframes Target: 100% of new applications processed within 90 working days (on receipt of all necessary information) Applications for ADS renewals processed within timeframes Target: 100% of renewals processed within 30 working days (on receipt of all necessary information) 100% of new applications processed within 90 working days 100% of renewals processed within 30 working days Achieved Achieved Comment: ADS tour operator spot checks were reduced midway through the financial year and the mystery shopper programme suspended due to a shift in focus towards reviewing/ amending the ADS Code of Conduct requirements and setting up an inbound tour operator incentive programme. The revised Code will take effect in September. 22
tourism outcomes Tourism Outcomes / This section describes the performance of tourism outcomes that the outputs described in the Statement of Service Performance contribute to. High level outcome: The value added to the New Zealand ECONOMy from international visitors is increased Tourism New Zealand activities along with activities of the tourism industry contribute to the success of this outcome. Success is also influenced by variables that are outside of the control of either party. During the /12 financial year, several factors contributed to a challenging environment for the tourism sector. Environmental events, including the 2010 and earthquakes in Christchurch and Japan, the Chilean volcanic ash cloud that disrupted air travel and the slow start to the ski season were compounded with economic challenges in the form of a strong New Zealand dollar resulting in a poor exchange rate for visitors from key visitor markets, the ongoing effects of the European financial crisis and the value being offered to Australian travelers by weaker currencies in Europe and the United States. Collectively, all provided downward pressure on the value of international visitors to the New Zealand economy. Balancing these downward pressures was the success of Rugby World Cup and strong growth in visitor arrivals from the China and South East Asia markets. The table below provides a summary of some of the key economic contributions that international visitors made to the New Zealand economy during the calendar year (CY) 5. Economic Contribution of Tourism Measure CY 2010 CY Trend International tourism expenditure in NZ $9.75b $9.60b Increase Tourism direct contribution to GDP 3.8% 3.9% Decrease Tourism full-time employees - direct 91,900 (4.8%) 91,300 (4.8%) Hold Tourism full-time employees - direct and indirect 179,800 (9.3%) 179,000 (9.4%) Hold Tourism's contribution to GST earnings $1.71b $1.66b Increase 5 Source: Tourism Satellite Account, Statistics New Zealand 23
tourism outcomes Tourism industry outcome 1: International visitor expenditure in New Zealand, from Tourism New Zealand s MARKETS, increases due to changes in international visitor arrivals, length of STAy and spend per day The number of visitors to New Zealand and the amount they spend depends on a range of variables, including (but not limited to): Tourism New Zealand s marketing activities; the impact of significant natural events both in New Zealand and in target markets; exchange rates and the general economic conditions in countries of origin; the marketing activities of competing destinations and the efforts of other National Tourism Offices, and airline scheduling decisions, seat capacity on air routes and ticket pricing. In /12, excellent growth in total visitor numbers from China (+ 33.3 per cent) and South East Asia (+15.8 per cent), was balanced by the decline in visitors from Japan (-14.6 per cent), Korea (-9.9 per cent) and modest declines from the UK (-2.5 per cent), USA (-2.8 per cent) and Germany (-3.4 per cent). Overall, total international holiday visitors increased by 5 per cent over the previous year, and total visitor arrivals increased by 5.4 per cent to 2.635 million 6. Visitor arrivals from Tourism New Zealand s top target markets are set out below: International Visitor Arrivals Target Market Year Ended 30 June 2010 Year Ended 30 June Year Ended 30 June Growth Rate /12 (%) Australia 1,119,437 1,111,192 1,175,296 5.8% China 105,190 131,648 175,488 33.3% UK 248,930 220,043 214,448-2.5% USA 194,008 188,150 182,816-2.8% Germany 65,021 65,237 62,992-3.4% Japan 83,587 78,559 67,072-14.6% South East Asia 7 80,273 89,252 103,312 15.8% Other 593,125 605,741 654,302 8.0% Total - All markets 2,501,264 2,501,303 2,635,726 5.4% 6 Country visitor arrival figures are derived from samples, the total arrival number may differ slightly from total actual arrivals. Source: International Visitor Arrivals (IVA), Statistics New Zealand 7 Includes: Thailand, Singapore, Malaysia and Indonesia 24
tourism outcomes International visitor expenditure 8 for the year ended 30 June was $5.566 billion, almost the same as the previous year. Total stay days 9 grew by 1.4 per cent in the /12 financial year led by a strong increase from China (22.7 per cent). Other markets remained relatively flat or declined. One notable exception was Germany which despite having a reduction in overall visitor arrivals (down 3.4 per cent), saw an increase in total visitor stay days. Total stay days by Tourism New Zealand s top target markets are set out below: Total International Visitor Stay Days Target Market Year Ended 30 June 2010 Year Ended 30 June Year Ended 30 June Growth Rate /12 (%) Australia 12,513,166 12,381,137 12,269,552-0.9% China 2,208,221 2,439,108 2,993,088 22.7% UK 7,362,364 6,347,532 6,291,760-0.9% USA 3,600,185 3,502,526 3,394,048-3.1% Germany 2,960,900 3,020,626 3,171,408 5.0% Japan 1,422,663 1,403,748 1,212,240-13.6% South East Asia 1,803,558 2,010,788 2,038,672 1.4% Other 18,621,962 19,053,030 19,492,176 2.3% Total - All markets 50,493,019 50,158,495 50,862,944 1.4% China experienced strong growth in visitor expenditure for the year, with other key Tourism New Zealand markets remaining flat or declining. The rising New Zealand dollar, resulting in New Zealand being relatively more expensive to visit for many markets, is believed to have contributed to a reduction in visitor spend while RWC is likely to have arrested the decline seen in previous years for the Australian and UK markets. 8 Source: International Visitor Arrivals (IVA), Statistics New Zealand; International Visitor Survey (IVS), Ministry of Business, Innovation and Employment. 9 Total Stay Days provide the total number of days visitors from each market stay in New Zealand and are sourced from the IVA survey (Statistics New Zealand). 25
tourism outcomes Visitor expenditure from Tourism New Zealand s top target markets is set out below: Total International Visitor Expenditure Target Market Year Ended 30 June 2010 (NZ $m) Year Ended 30 June (NZ $m) Year Ended 30 June (NZ $m) Growth Rate / (%) Australia $1,743 $1,642 $1,638-0.2% China $365 $410 $522 27.3% UK $706 $576 $568-1.4% USA $514 $443 $448 1.1% Germany $276 $236 $194-17.8% Japan $355 $268 $238-11.2% South East Asia $222 $240 $216-10.0% Other $1,995 $1,989 $1,742-12.4% Total - All markets $5,953 $5,564 $5,566 0.0% Tourism industry outcome 2: Visitors have a high quality experience in New Zealand that MEETS or exceeds their expectations Visitors to New Zealand during /12 remained very satisfied with their New Zealand holiday, rating their experience on average 8.9 out of 10. Almost all visitors (96 per cent) also provide positive feedback to others once they return home 10. International Visitor SATISFACTION Visitor Market Overall international visitor satisfaction Positive feedback to others about New Zealand /12 Actual Year on year change % /12 Actual Australia 8.9/10 no change 96% -1% China 8.8/10 no change 99% +2% UK 9.1/10-0.1 96% -2% USA 9.2/10-0.1 97% -1% Germany 9.2/10-0.1 98% +1% Japan 8.9/10 +0.3 96% +2% All markets 8.9/10 no change 96% -1% 10 Source: Visitor Experience Monitor, Tourism New Zealand Year on year change % 26
tourism outcomes Tourism New Zealand OuTCOMES Tourism New Zealand s output classes in /12 were carefully selected for the contribution they would make to the achievement of the following organisation-specific outcomes: Tourism New Zealand Outcome 1: Conversion: Tourism New Zealand s target audiences desire to visit New Zealand and rate of conversion to travel is increased. Tourism New Zealand Outcome 2: Information and satisfaction: Visitor spending and satisfaction is increased through access to information that encourages activity and use of quality assured tourism services. These outcomes, which are outlined in more detail in Tourism New Zealand s Statement of Intent -14, have been developed to support the High Level outcome and wider tourism industry outcomes. Measures used to monitor the effect of Tourism New Zealand outputs on the outcomes are described below. Tourism New Zealand OuTCOME 1: Conversion There are many destinations competing to attract visitors. To achieve the government s economic priorities and contribute to achieving tourism industry outcomes, visitors need to choose New Zealand over other destinations. This means they must have a preference for New Zealand as a destination and must be given an easy path to purchase. Tourism New Zealand monitors the levels of connection and engagement with target audiences by measuring how many people are drawn into the path to purchase via digital media, and the depth of engagement with these people. The number of visitors who are drawn to Tourism New Zealand s consumer site (newzealand.com) and referred to partner sites are tracked as is the size and activity of Tourism New Zealand s social media fan base (e.g. Facebook). Digital Media Measures Measures 2010/11 Actual /12 Target /12 Actual newzealand.com average monthly referrals to partner sites New measure 202,500 Site only: 114,535 incl. direct to partner: 469,585 Number of prospects generated on newzealand.com (average per month) New measure 650,000 396,892 Size of TNZ social media fan base New measure 700,000 713,065 Active monthly users of TNZ's Facebook fan base New measure 302,000 665,053 11 Significant direct-to-partner activity occurred during the year where traffic was sent direct from paid advertising to partner sites rather than through newzealand.com, this is reflected in the average monthly referrals. This also impacted on the number of prospectors as due to the increased direct to partner activity, traffic to newzealand.com was lower resulting in a smaller pool of potential prospect traffic. 11 Active monthly users of Facebook result is to the end of February, as the measure was removed from Facebook at this time. 27
tourism outcomes Active Considerers preference for New Zealand as a holiday destination Tourism New Zealand utilises resources to target a group of consumers called Active Considerers (ACs). ACs are aware of New Zealand, and they are already actively considering New Zealand as a destination for their next overseas trip. To help gauge the impact marketing spend is having on the level of preference ACs have for New Zealand over other competing destinations, Tourism New Zealand undertakes monthly campaign tracking within key markets. Tourism New Zealand s focus is on increasing the number of ACs who consider New Zealand their first or second most preferred destination. Proportion of Active Considerers who consider NZ their first or second preferred DESTINATION (95% confidence) Market 2010/11 (Q4) Actual /12 Target /12 Actual Australia 48% 53% 51% China 68% 73% 76% USA 46% 49% 47% UK 57% 60% 61% Germany 57% 58% 49% Note: results for 2010/11 are for Q4 only, /12 result is for full year. Preference for New Zealand remained relatively stable across most key markets that Tourism New Zealand monitors. Exceptions are China which showed strong year-on-year improvement with New Zealand growing in popularity as a visitor destination and Germany which is well down in preference. For German Active Considerers the expense of travelling to New Zealand compared with other destinations is a key barrier and while German Active Considerers appear to have a good level of knowledge of New Zealand and what it has to offer, cost and accessibility appear to be preventing conversion. Referral rates from search engine marketing (SEM) and digital display advertising Referral rates from search engine marketing and digital display advertising measure the percentage of people who once drawn to newzealand.com are then delivered to an operator or partner where an actual purchase can be made. 28
tourism outcomes Referral rates from search engine marketing (SEM) and digital display advertising Referral rates from search engine marketing and digital display advertising measure the percentage of people who once drawn to newzealand.com are then delivered to an operator or partner where an actual purchase can be made. Referral Rates From SEM and Digital Display ADVERTISINg digital display Market 2010/11 Actual /12 Target /12 Actual Australia New measure 12-15% 17.0% China New measure 2-3% 6.0% North America New measure 12-14% 15.0% UK New measure 14-16% 15.7% Germany New measure 2-3% 8.8% Japan New measure 10-12% 6.3% sem Market 2010/11 Actual /12 Target /12 Actual Australia New measure 7-10% 18.1% China New measure 3-5% 5.0% North America New measure 7-10% 13.8% UK New measure 15-17% 15.0% Germany New measure 2-3% 11.7% Japan New measure 7-10% 6.9% Referral rates have generally performed ahead or in line with targets, an exception being the Japanese market. Referral rate targets for /12 were based off a small sample of data, while most targets were proven to be appropriate, it became apparent through the year that the targets for Japan were too challenging. Referral targets for /13 have been refined to enable improved monitoring of outcomes of the implementation of Tourism New Zealand s digital marketing strategy. 29
tourism outcomes Tourism New Zealand OuTCOME 2: information and SATiSFACTion Tourism New Zealand monitors the use of i-sites as well as the satisfaction and spend of i-site users. Variances between the satisfaction of i-site and quality assured products and services (Qualmark) users are also monitored to help assess the impact that Tourism New Zealand s focus on information services and quality assurance has on maximising visitor spend and improving overall levels of satisfaction to be evaluated. The level of satisfaction of Chinese visitors is also monitored as historically this has been significantly lower than overall visitor satisfaction. Result/measure 2010/11 Actual /12 Target /12 Actual Number of i-site visitors as a percentage of holiday visitors 56.90% Maintain or improve from 56.9% Average transaction value of a i-site visitor $126 $135 $115 Average total expenditure attributable to all i-site visitors increases $3,277 $3,343 $3,142 Satisfaction of overall tourism experience for all i-site visitors compared to those who did not use an i-site Satisfaction of visitors who used Qualmark services compared to those who did not use Qualmark services Qualmark and I-SITE Use and SATISFACTION i-site users: 9.1/10 non i-site users: 8.9/10 Qualmark: 9.1/10 Non-Qualmark: 9.0/10 Maintain at or above 9.0/10 and above satisfaction levels of non i-site users Maintain at or above 9.0/10 and above satisfaction levels of non-qualmark users 49.90% i-site users: 9.0/10 non i-site users: 8.8/10 Qualmark: 9.0/10 Non-Qualmark: 8.9/10 Level of satisfaction of Chinese visitors 8.8/10 Maintain at or above 8.7/10 8.8/10 A range of factors have contributed to a decrease in the use of i-sites over the past couple of years. The increased use of mobile technology, shorter average length of stay and increased prevalence of Chinese organised tour group visitors (who have a low level of visitation to i-sites) have all contributed to the reduction in visitors to i-sites. In addition, the relative strength of the NZ dollar has likely influenced the reduction in average transaction value and average total expenditure. While the average expenditure for i-site users has reduced slightly, at $3,142 it remains higher than the average spend for international visitors overall of $2,312. Although this difference is likely to be due to a number of factors e.g. the type of visitor that goes to an i-site, it is still worth noting. Satisfaction of users of Qualmark services remained higher than non-users while the satisfaction of Chinese visitors (8.8/10), has closed the gap with overall visitor satisfaction (8.9/10). 30
Equal Employment Opportunities Under Section 151 (1)(g) of the Crown Entities Act, Tourism New Zealand is required to provide information about compliance with obligations to be a good employer, including our Equal Employment Opportunities (EEO) Programme. Set out below is a work place profile for Tourism New Zealand as at 30 June. Executive Management Equal Employment Opportunities Summary Direct Reports to Executive Managers or Staff with Responsibility for Specific Output Areas Other Managers with Staff Responsibility (4th Tier) Professional and Support Staff % of of Total Org 9.6% 24.0% 5.8% 60.6% % of % of % of % of NZ European Men 60% 36% 5% Female 40% 44% 33% 41% Maori Male 8% 2% Female 3% Asian (inc South Asian) Male 4% 17% 3% Female 4% 33% 25% Other Female 4% 17% 21% Women and people of Asian descent continue to be well represented at all levels of the organisation. Tourism New Zealand continues to support the development and growth of all of our people and in order to facilitate this, has undertaken the following: Started a project to review and develop tools for our people on communicating effectively with Maori, Maori etiquette and culture. Provided training to our people around communicating effectively with Maori. Implemented a global community initiative to help celebrate cultural diversity of our employees, improve communication and global connectedness between onshore and offshore offices. Culture and Accountability Tourism New Zealand remains committed to being a good employer and as such, to managing and leading all employees fairly and properly in all aspects of their employment. This includes people in our offshore offices where there are different jurisdictional requirements and statutory minima in the areas of Equal Employment Opportunities (EEO). Our Executive Leadership Team and broader management group is committed to demonstrating leadership and accountability in all areas of EEO and, from an EEO perspective, this means a commitment to, and activity in, the following areas. 31
Equal Employment Opportunities Recruitment, Selection and Induction Our recruitment and selection procedure has been developed to ensure that all prospective employees are given the opportunity to participate equally in the recruitment process. Our selection process typically involves a structured competency and behaviourally based interview, detailed reference checking, a screening tool, and for senior positions, a psychometric assessment tool, all of which are validated and support EEO principles. Tourism New Zealand also provides appropriate support for Māori and Pacific peoples and people with English as a second language during the recruitment and selection process. Leadership, Learning and Development Tourism New Zealand has a leadership development programme. In terms of organisational capability, effective leadership including understanding and knowledge of kaupapa and tikanga Māori continue to be areas of focus. Te Wiki o Te Reo Māori and Matariki are also actively supported by Tourism New Zealand through a programme to provide additional skills training and learning opportunities. We also have a talent management programme in place, focussing on nurturing and growing key talent within the organisation regardless of gender, ethnicity or any other demographic factor. Other training and development needs are identified on an individual basis and are agreed between the manager and employee. Development programmes are selected based on both organisational requirements and individual development needs. Development needs must be aligned to agreed key performance indicators. Flexibility and Work Design Tourism New Zealand has an active programme of supporting flexible working arrangements and job design to assist employees to manage different aspects of work life balance. We continue to: Support staff with disabilities through work place design changes, and accommodate individual needs in the work place. Support parents in their return to work by offering part-time and gradual return to full-time arrangements, and flexitime to accommodate child care needs. Support expectant parents by granting additional paid time away from work to attend appointments associated with the pregnancy. Support staff with responsibilities for child and eldercare by offering flexible working arrangements. Remuneration, Recognition and Rewards Tourism New Zealand differentiates remuneration based on performance and is committed to compensating employees competitively and equitably, with attention to affordability and within the scope of available resources, regardless of ethnicity, gender or physical ability. Individuals identified as not meeting the requirements of their role are provided with support, training and development where required to assist them to achieve success. Harassment and Bullying Prevention Tourism New Zealand has a very strictly adhered to policy and procedures for dealing with work place harassment and bullying. Over the past twelve months, there have been no reported allegations relating to harassment and/or bullying. Safe and Healthy Environment Tourism New Zealand has a good and safe working environment, and we have published and well understood policies with regard to this, which have actively encouraged staff involvement. Over the last twelve months, additional support for people has included specialist work place assessments and the provision of special equipment to ensure that employees are able to contribute effectively in all aspects of their working life. 32
financial statements Financial Statements Statement of Responsibility In terms of the Crown Entities Act 2004, the Board is responsible for the preparation of the New Zealand Tourism Board s financial statements and statement of service performance, and for the judgments made in them. The Board of New Zealand Tourism Board has the responsibility for establishing, and has established, a system of internal control designed to provide reasonable assurance as to the integrity and reliability of financial reporting. In the Board s opinion, these financial statements and statement of service performance give a true and fair view of the financial position and operation of the New Zealand Tourism Board for the year ended 30 June. The Members of the New Zealand Tourism Board and authorised these financial statements for issue on 1 September. Signed on behalf of the Board: K. Prendergast M. Johns Chairman Deputy Chair 1 September 1 September 33 Chris Sisarich