Why did international tourist spend fall? Here’s MBIE’s explanation

We at the Ticker were surprised to see a fall in total international tourist spend in yesterday’s Tourism Satellite Account from Stats NZ, given the growth in visitor numbers in the year to March 2017 and the performance of operators in the market.

The spending data is informed by the Ministry of Business, Innovation and Employment’s International Visitor Survey* so we asked MBIE:

What have been the drivers of the 0.9% drop in international tourism expenditure as reported in the TSA 2017?

Below is MBIE’s reply.


With the latest Tourism Satellite Account it is difficult to deduce an exact cause for the drop in international tourism given the data we have; however there are many factors that could have influenced the lower spending figures.

The information below outlines this issue further and expands on the difficulty of pinpointing the exact reason for the 0.9 per cent decrease in international tourism expenditure.

Detailed response from MBIE’s Mark Gordon – Manager, Sector Trends:

Mark Gordon

“We cannot explicitly determine all of the possible drivers of international tourism spending. A number of factors can influence the type of visitors coming to New Zealand, and also how these visitors choose (or are able) to spend during their trip. However, we can infer some things from changes in the composition of international visitors and also changes in the value of the NZ dollar against other currencies.

Simply looking at the movement in visitor arrivals and assuming an equivalent increase in visitor spend is unwise. There are obvious periods where the trends differed – for example in the years following the global financial crisis, visitor arrivals were increasing while average and total spend decreased. In fact, this pattern continued from 2009 through to the end of 2014.

International visitor spending over the year to March 2017 was estimated to be down slightly from the record high spend recorded in the previous year, and following two consecutive years of historically high growth. To understand this better, it’s important to assess what was occurring during the years ending March 2015 and 2016.

2015 saw the beginning of two factors that surely had a significant effect on boosting both the total spend and the average spend per visitor. We not only saw strong growth in visitor arrivals but also particularly from the Chinese market, who began to make up a larger proportion of the visitor population, while Australians began to make up a smaller proportion. Chinese visitors spend more than Australians, who include a large number of travellers visiting for short periods of time, and staying with family or friends. The other factor was the strengthening of some international currencies against the NZ dollar.

The Chinese Renminbi began strengthening against the NZ dollar in early 2015, coinciding with the time the number of Chinese visitors increased significantly. For an individual visitor, this means they have more money available to spend in NZ dollars during their trip. In the IVS, we could see that the average spend for Chinese visitors was around $771 in the year ending March 2014, and had increased to $1,243 in the following year.

This trend seen in 2015 (in terms of visitor arrivals and the exchange rate) continued through the year ending March 2016.

During the year ending March 2017, the NZ dollar began strengthening against other currencies, particularly the Chinese Renminbi, the US Dollar and the UK Pound. Even though overall visitor arrivals continued to grow at a high rate, the IVS showed the average spend per visitor fall for many of our key markets.

It’s important to note that the average spend for most markets is still very high historically, just not as high as the estimates recorded in the year ending March 2016.

These factors alone don’t fully explain why international spend is down from previous highs, and more information would be required to understand other factors that have changed the spending behaviour of international visitors.

As we have often emphasised prior to this, we would recommend users interpret the long term trends in the international visitor spending statistics, rather than focus heavily on the year-on-year changes. We would also point to the fact we now have IVS results up to the year ending September 2017, which show there has been a four percent increase in spending compared to the previous year.”

*Stats NZ is preparing to conduct a review of MBIE’s International Visitor Survey, with the terms of reference expected to be set before the end of the year.

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