How to cut numbers and smooth out the bumps

Visitors crowd the track in the southern crater of the Tongariro Crossing in February last year....
Visitors crowd the track in the southern crater of the Tongariro Crossing in February last year. Photo: NZ Herald
Economics professor Tim Hazledine  believes congestion taxes could be part of the solution to tourist overcrowding.

Tourism New Zealand chief executive Stephen England-Hall warns of the danger of over-pricing our tourist attractions; of not delivering good value for money to our overseas visitors.

Having just recently forked out $160 per person (with no tip!) for dinner at an absurdly pretentious Wanaka restaurant that wouldn’t last one week in Auckland, I think I know what he means. 

Outside of the main centres there is still what one might politely call unevenness in both quality and value for money in our commercial tourism sector.

But I am not too worried about this, for three reasons. First, we are getting better all the time. Our wines, coffee and (mostly) cafe and restaurant food, if not service, are well over the mark - world-class, really. We still lag in cheeses, beer, bread  and mid-to high-end hotel accommodation, but are improving there also.

Second, we don’t fleece our tourist visitors - or no more than we fleece ourselves. Tourism is not an enclave industry in New Zealand, as it is, say, in the other islands of the South Pacific. We were a party of Kiwis in Wanaka on Saturday night, sharing our mistaken choice of venue with other locals as well as foreigners. We’re all in it together.

But the most important reason is that food, wine etc actually aren’t all that important to our tourists. People don’t traipse halfway around the world just to enjoy New Zealand’s unique cuisine and sleep in famous New Zealand hotel rooms. 

They mainly come for two quite different reasons: to visit friends and family, and/or to explore and enjoy our natural attractions. 

And with respect to the latter,  perhaps we are fleecing our guests, in the following sense. We’ve got 5-10% annual growth in tourist numbers crowding into a basically fixed supply of land-based activities: walks, parks, rivers, sounds, lakes and the infrastructure around these. Inevitable result: overcrowding, congestion, queues - destruction of value that benefits no-one, neither locals nor visitors.

The solution is simple: impose a congestion tax on visitors - a per capita charge on everyone coming into the country, carefully calculated to match the costs suffered from overcrowding of our natural attractions. How large would the congestion tax need to be? We haven’t yet carried out the careful calculations, but it would not surprise me if a peak season rate of around $250 per visitor would be justified.

But wouldn’t this deter people from coming to New Zealand? Yes, of course it would - that’s the point of it! But those put off would be, by definition, the marginal, least keen visitors - the folk who are the closest to not choosing New Zealand as their holiday destination at all, but whose presence here is the tipping point for devaluing the experiences of everybody else.

And there is some juicy low-hanging fruit to be plucked. To a large extent, tourism congestion in New Zealand is seasonal, generated by summer surges in visitors. Off peak, and in the spring and autumn shoulder seasons, many of the great walks and other natural attractions are not crowded.  

A congestion tax that dropped down from, say, $250 per person  in the summer to perhaps nothing at all in winter, would probably be quite effective at smoothing out the seasonal peaks and troughs.

However, it is probably the case that overall annual visitor numbers to New Zealand need to be capped for the sake of the environment and the enjoyment to be had from it, especially if the recent demand surge continues. 

To be clean and green, we may need to also be expensive, albeit delivering reasonable value for that money to those who care enough to pay it.

England-Hall has told me that his organisation’s international marketing budget is 100% directed at boosting shoulder season visitors, and I am very pleased to learn this, and about other useful initiatives carried out to spread the good word about our quite groovy little country.

But he needs help. Only central government can impose taxes, and probably only government can lead the serious fact-finding analytical exercise that should underpin tax and other tourism policies. 

What is the right price for New Zealand? This is a conversation that needs to continue.

- Tim Hazledine is a professor in the economics department of the University of Auckland Business School.

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