The value of cruise to NZ has been slashed by hundreds of millions of dollars – here’s why

Estimates for the value of Auckland cruise spending vary from Stats NZ’s $96m to Market Economics’ $419m.

The estimated value of cruise spend in New Zealand during the 2016-17 season was slashed by $318m in the latest Tourism Satellite Account, prompting questions over the accuracy of previous industry assessments.

Stats NZ’s TSA 2017, the country’s premier tourism data collection, has for the first time included insight into cruise ship expenditure in New Zealand.

However, the TSA’s estimate of $306m for the value of the activity last sailing season contrasts markedly with the NZ Cruise Association’s own assessment of $624m.

NZ Cruise commissioned Auckland-based Market Economics (ME) to produce the Cruise Tourism’s Contribution to the New Zealand Economy 2017 report released in August this year.

It’s estimate of $624m for last season’s NZ cruise expenditure, which includes ship fuel and international airfares, saw Auckland take $419m.

Kevin O’Sullivan

But yesterday’s TSA estimates Auckland as seeing only $96m – less than a quarter of ME’s assessment.

NZ Cruise chief executive Kevin O’Sullivan said there were obvious differences in methodology in the two estimates and the association would work to reconcile the figures.

He said he was not surprised that ME’s Auckland estimate of $419m, which had been used by some to justify the building of new cruise ship infrastructure in the city, had drawn the ire of people upset the figure may have been overstated.

“It doesn’t surprise me because the business plan for what’s happening at the waterfront relies on good economic data – that’s reasonable,” said O’Sullivan.

“But I don’t think what we are seeing [in the TSA] for Auckland is correct. It’s intuitively too low but we need to look at how these figures are derived and why there is such a significant difference.”

One of the authors of the Market Economics report, Rodney Yoeman, told the Ticker his assessment differed in three main ways from the TSA. The TSA did not account for:

  1. Domestic cruise passengers (an exclusion noted in the TSA)
  2. The value of airfares to NZ by cruise passengers (also noted in the TSA)
  3. The value of cruises that did not leave NZ waters and so are not captured by Customs

“Stats NZ has done a wonderful job and they have collected data that we could not get hold of so, in some instances, I applaud their efforts,” said Yoeman.

“What they have done is amazing and we are keen to piggyback off their work but having included those three key areas as well.”

Market Economics has forecast cruise spend to be worth $744m for this season and $911m for 2018-19 – figures that will come under scrutiny as the TSA dataset develops.

A Stats NZ spokesman said data from a number of cruise suppliers had been accessed for the first time to help produce the new TSA statistics. For example, Stats NZ had gained access to crew manifest data, which provided a significant boost in insight.

That meant there was less reliance on modelling, which ME’s estimates are based upon, and more hard data that could be used to build a picture of spending.

That helped explain one of the most significant differences between the two estimates: according to ME’s modelling the value of vessel expenditure over the 2016-17 season was estimated to be $234m but Stats NZ’s sourced data from the vessels themselves valued it at half of that, $117m.

Accounting for that difference wipes $117m off ME’s total $624m estimate reducing it to $507m and leaving an overall gap of around $200m between the two assessments.

Stats NZ’s recently published new cruise visitor arrivals data collection also allowed a more accurate scaling of expenditure figures, said its spokesman.

“We have also put together a tighter boundary around what is [considered] cruise spending. We have worked with some of the stakeholders to ‘tighten up’ in terms of the geolocation from around the port and the timing relative to the visit of the ship.”

That could help account for some of the $323m gap in the Auckland spending figures, although by how much is unclear.

The TSA 2017 notes that “domestic expenditure undertaken by passengers is recorded within existing domestic tourism estimates but is not currently separately identifiable”. That means specific domestic cruise spending data may not be available from the TSA, presenting a gap for those looking at the value of the industry as a whole.

Of the 222,000 cruise ship passengers who visited New Zealand in the June 2017 year, New Zealanders made up 7% of passengers with Australians comprising 50% and Americans 18%, according to Stats NZ’s new cruise ship traveller statistics.

The department also said the collection of cruise passenger airfares data was not an easy task because airlines did not hold information on which passengers were flying to join a cruise. That research would need to be conducted with the travel industry and data could possibly be included in future TSA reports.

NZ Cruise’s O’Sullivan welcomed the TSA’s new cruise data collection – something the association said it had been pushing for years for the government to produce.

However, he still had concerns over gaps in the TSA dataset despite its use of what appeared to be clearly superior sources compared to ME’s modelling.

“I think we can build on this for the future because to me it doesn’t feel right and there are some holes in it that need to be plugged,” said O’Sullivan.

“Stats NZ have done a good job in getting hard, sourced data but I think what we need to do is sit down with them and with Market Economics to figure out where the differences are and how we can fill those gaps.”

With cruise spend last season increasing by 12% on 2015-16, according to the TSA, and forecast to increase by around 20% over the next two years, according to Market Economics, the trend at least is clear: the industry is on the move.

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