Bumpy road ahead to scale up tourism sector

Hundreds of rental cars stored behind Queenstown Airport in April 2020. PHOTO: STEPHEN JAQUIERY...
Hundreds of rental cars stored behind Queenstown Airport in April 2020. PHOTO: STEPHEN JAQUIERY/ODT
A battered travel industry is scrambling to get the cars, buses and workers to gear up for a return of increasing numbers of visitors and faces plenty of obstacles on the road to recovery.

The borders fully reopen to all visitors at the end of next month, but the $41 billion industry is a shadow of its former self, many smaller operators having been unable to survive more than two years of closed borders and lockdowns.

Those still in business or giving it another go will likely find it difficult to scale up in time for the peak summer season, given a shortage of rental cars, campervans, bus drivers and other staff to bring tourism businesses out of hibernation.

However the industry was not expected to rebound quickly, which would give more time to rebuild businesses, Tourism Industry Aotearoa chief executive Rebecca Ingram said.

‘‘We’re certainly not anticipating a bounce back to 2019. It’ll be two to three years we think before we find our new normal.’’

New Zealand had 3.9 million visitors in the 12 months to February 2020, shortly before Covid-19 was declared a pandemic and borders were closed, bringing travel to a halt.

Big investment needed in transport

Bus and Coach Association chief executive Ben McFadgen said the industry was about 60% of what it was before the pandemic, the number of operators having halved and the number of coaches having tumbled to 1200 from 2000.

Most of about 70 operators still in business were small and would struggle to find the staff and capital necessary to scale up to meet anticipated demand in the short term, he said.

‘‘With all the uncertainty at the moment, banks have been fairly loath to lend money to the operators of these high-capital businesses because of the risk involved.

‘‘We don’t know, for example, that we’re [not] going to get another outbreak of Covid.’’

One of the biggest operators, campervan and attractions company Tourism Holdings Limited (THL) sold off many vehicles during the pandemic and is still refining its operations, and a sale of its bus tour company Kiwi Experience remains a possibility.

‘‘It’s not something we’re desperate to get rid of, but if it can find a better home and we can get some more focus on our core business then we would do that,’’ THL chairman Rob Campbell said, adding that the company was busy rebuilding its camper-van fleet.

Despite a shortage of vehicles, the market was still competitive and he did not think fewer vehicles would result in rising prices, he said.

That was not the case for the rental car market, which had undergone a significant reduction in the fleet.

Go Rentals chief operating officer James Dalglish said the national fleet had lost more than 30,000 vehicles, putting it at less than half its pre-pandemic level.

‘‘Business is starting to build again, which is encouraging, and we’ve certainly got enough fleet at the moment to meet the demand, although the demand is definitely building and that’s having an effect on market price.

‘‘It would be fair to say that pre-pandemic, the market in New Zealand was suffering from an oversupply - too many brands and too many vehicles - and that was resulting in a lower market price and right now we’re seeing the opposite of that.’’

The short-term worry was whether there would be enough vehicles to meet the summer demand, as well as the coming winter ski season and July school holidays, Mr Dalglish said.

‘‘We’ll be able to scale up over time but it’s a good few years away before we get back to pre-pandemic visitor levels.’’

Labour market concerns

The biggest worry is keeping or finding experienced staff.

For the cruise ship industry, a $700 million-a-year earner before the pandemic, the issue is support facilities and labour when ships resume calling from October.

‘‘We believe we can deliver good numbers of visitors on cruise ships, and that should certainly help the visitor economy, but of course the visitor economy needs to be ready,’’ Cruise Association chief executive Kevin O’Sullivan said.

Mr McFadgen said many former drivers were working for public transport and would leave a gap in those industries if they returned to tourism.

‘‘Tours out of Auckland and Christchurch should be able to meet demand, but some of the smaller centres, including Queenstown, Tauranga and Napier face gaps,’’ he said.

‘‘New Zealand is traditionally made up of a large number of smaller tour operators. It’s the smaller operators that deliver that unique Kiwi experience.’’

Ms Ingram said a $100 million government fund to support small businesses would help kick-start the industry, although past support has gone to big operators and banks were talking about lending again to tourism operators.

Most of all, she said, the industry would still rely on domestic tourism to get through the next few years.

‘‘New Zealanders have been such an important part of the tourism industry over the last couple of years,’’ she said. 

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