Coronavirus: Can This New Zealand Travel Hotspot Recover Just from Domestic Tourism?

New Zealand's tourism industry has been struggling with the border closed since March 19 due to the Covid-19 pandemic. In a normal year, international tourism is New Zealand’s biggest export — and with its majestic alpine scenery, adventure sports and vineyards, Queenstown is usually booming.

There are fewer foreign accents to be heard in the resort town. Bars are shuttered, jet boats sit out of the river for half the week, and one of the area’s biggest ski fields is closed Monday to Friday.

“It was like turning off the key in the ignition of a car, it just stopped,” Queenstown Lakes District Mayor Jim Boult said. “The effect on local business, employment, the local economy has been horrific.”

Queenstown is running at about 40% of normal in terms of tourist spending, even with more locals taking the opportunity to visit.

Across the country as a whole, foreign visitors spent NZ$17.2 billion ($11.5 billion) in the 12 months to March 2019, accounting for 20% of the country’s total exports. Ordinarily, they would spend roughly NZ$1.9 billion a year in Queenstown.

Boult says that the region is running at about 40% of normal in terms of tourist spending, even with more New Zealanders taking the opportunity to visit. Domestic visitors tend to be more price-sensitive than foreigners, and local operators have been unable to avoid the hit.

NZ Ski, which owns two of the region’s key ski fields, expects visitor numbers will fall about 30% this season. But revenue may be down as much as 50% because domestic skiers spend less than Australians — who usually make up about a third of visitors — on lessons and equipment hire, Chief Executive Officer Paul Anderson said. In anticipation, the company began the season by halving staff levels, cutting internal costs such as marketing and reducing weekday access to the slopes.

Anderson is bracing for a tough 2021, with the slim chance of some upside if a safe-travel zone can be established with Australia. The “Trans-Tasman bubble” is being worked on by officials although community outbreaks in both nations have delayed implementation.

“If we get the Trans-Tasman bubble and Australians can’t go anywhere but New Zealand, we will be overrun, it will be a very nice problem to have,” he said. “But our planning assumptions are we’re not going to have that.”

Local employers like Anderson are heavily reliant on foreign workers in normal times, particularly for lower paid roles, and staff cuts have left many of them stranded.

There are about 4,000 migrant workers still in the district. At the height of the lockdown in April and May, about three-quarters of the people queuing outside the Salvation Army food bank were from the migrant community, said Andrew Wilson, Director of Community Ministries for Queenstown.

“It has settled a little bit, particularly on food welfare, because people have moved out of town on repatriation or shifting to places where they can secure a lower cost of living, or some form of job,” he said.

Meanwhile, Queenstown’s notoriously high cost of living is moderating, with more rental properties on the market as the town has emptied out and former vacation rental businesses have become available to permanent tenants.

“Rents have been lowered to something we can afford,” said Nick Webster, a young Australian worker who arrived in the town in early 2019. “It’s almost ironic that it’s easier to live here than beforehand, and that has taken stress off people.”

Average property values fell for a fourth month in August and are down 7.4% from a peak in May, according to CoreLogic data. Still, at an average asking price of NZ$1.1 million, the market is expensive for many buyers.

“We haven’t seen a whole lot of distressed sales,” said Bas Smith, co-owner of realtor Ray White Queenstown. “There’s a real maturity in the volume of high-quality buyers coming through and it’s putting pressure on the top end of the market.”

Mayor Boult is confident his town will get through the near-term impacts, and sees potential for alternative sources of revenue, such as film production or education. But establishing those will take time.

“We are well down track of thinking of ways to diversify income, but you don’t do that overnight. Looking at models around the world, it can take 10 years to turn the ship only a few degrees.”

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