Banks: Capacity constraints putting tourism growth at risk

Short-term visitor arrivals were flat in March compared to the same month last year marking the first period since 2014 when a new monthly record was not set.

In March 2017, short-term visitor arrivals dropped by 600 to 343,800 compared with March 2016, according to Stats New Zealand’s latest International Travel and Migration figures.

“For the first time since August 2014, annual short-term visitor arrivals did not mark a new record high,” said ASB Bank economist Daniel Snowden, who tracks the tourism sector.

“Before alarm bells start ringing, the dip was only around 600 visitors over 12 months and could be down to the timing of Easter in 2016, which was in March [last year].”

However, the pace of growth in visitor arrivals has flattened off over the past six months, added Snowden.

“This could be due to a combination of factors but the sector is starting to run into capacity constraints, especially in accommodation. This has pushed up accommodation prices in some areas, which could put a dampener on future growth.”

That sentiment was echoed by ANZ Bank, which said: “The broader trend in arrivals has moderated. More than anything that probably reflects capacity issues.

“However, we expect ongoing lifts in arrivals numbers over the coming months supported by the lift in the weekly China-NZ flight cap and due to key events [such as] the World Masters Games and British and Irish Lions rugby tour,” added ANZ.

“Annual growth is now flat, but that reflects contrasting signals from lower Australian arrivals, perhaps related to the timing of school holidays, and strong growth from the likes of the US, Europe, excluding the UK, and some Asian nations. Chinese arrivals are up 4% year-on-year.”

Short-term visitor arrivals, which include tourists, people visiting family and friends, and people travelling for work, reached 3.543m for the year ending March, up 8.9% on the year ending March 2016, according to Stats New Zealand. That number also equalled the previous annual record set in February.

“The majority of the visitor arrivals in March 2017 were from Australia, 36%, followed by China, 12%, and the United States of America, 11%,” said population statistics senior manager at Stats NZ, Peter Dolan.

Additionally, seasonally adjusted arrivals were up 1.5% for March compared to February this year. This is ahead of the expected boost to come from April’s World Masters Games and the June/July British and Irish Lions tour.

New Zealand residents took a record 2.68m overseas trips in the year to March 2017, up 10% on the year to March 2016.

In in the month of March 2017, New Zealand residents left on 192,200 overseas trips, up 11% on March last year.

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