Tourism Industry Aotearoa’s chief executive, Chris Roberts, calls on the inbound and hotel sectors to work together to optimise tourism opportunities.
The tourism landscape is changing fast, and both hotels and the inbound sector need to adapt to this changing landscape.
It is widely recognised, from central government down, that New Zealand’s tourism boom has led to a much tighter accommodation market, particularly in our most popular destinations and at the upper end of the market.
TIA Hotel statistics show that most hotels are busy but are not full, even at times of peak demand, suggesting we have sufficient inventory – for now.
However, as tourism continues to grow, we need a supply response to the increasing demand – including new hotels. This is obviously not something that happens overnight but efforts are being made to attract investment.
In the meantime, hoteliers are working to meet market demand across the spectrum including group tours, business and holiday travel.
Inevitably, this has meant dynamic pricing is applied to address the supply and demand issues. Hotels are not alone in this practice – airlines and some land transport operators also use it.
As the peak body for the tourism industry, TIA hears about the impact of these pricing changes from all sides – including the inbound operators who are hit with big price increases, and the hotels that are finally making reasonable returns after years of low profitability.
When prices go up, there is always a concern that this will put off the customer. But we have to remember that New Zealand is deliberately targeting value over volume. We are also wanting to reduce seasonality and encourage visitors to come outside of the peak season. Pricing is probably the most effective tool to achieve this.
Every business needs to be careful when seeking to maximise its revenue that it is continuing to deliver value.
TIA recognises that consumer perceptions of value can be driven and influenced by the information available, marketing initiatives, individual preferences and country of origin, as well as the price of the offering. That’s why it is so important that pricing strategies are consistent with the perception of value that our industry wishes to foster.
Hotels and inbounders have had to adapt to consumers’ use of new technology. Travellers are doing their own research and booking online rather than using third parties, so all operators need to clearly demonstrate their value to customers.
Hotels are keen to work with ITOs, as they know the market and can provide invaluable advice to guests. But ITOs must move with the times.
ITOs have been advised that the days of static contracts are numbered, and that they will need to innovate, become more nimble, and invest in technology – which must create new yield opportunities for them.
Hotels and ITOs need each other. We must keep finding ways for all sectors to work together if NZ Inc. is to optimise its tourism growth opportunities.