Across the ditch

During a time when thetourism sector has been struggling, Statistics NZ data shows that the number ofvisitor arrivals from Australia topped one million in the year to May 2009 forthe first time.   Although this milestone is a great one to have reached, thesheer number of people coming across the border isn’t the only factor thataffects our economy’s tourism earnings – the make-up of those visitors is alsoimportant.   Over the last decade, the make-up of those visitors has changed,and as far as our economy is concerned, this change has not been a beneficialone.

Australians offer the least

In comparison to other nationalities, Australians offerthe least benefit to the New Zealand economy per visitor.   In the year to June2009, the average expenditure of a visitor from Australia was $1,793.   Of theten most common nationalities for visitors to New Zealand, this figure placesAustralians as the lowest spenders, spending 30% less than the next most frugaltourists, from Singapore.   Over the year to June 2009, one Japanese visitorspent the same amount as 2.8 Australian visitors.   This gap is largely due toAustralian visitors staying for a shorter period of time than any othernationality because of the close proximity of the two countries.

New Zealand’s ties with Australia have also strengthened,and with increased competition resulting in cheaper airfares across the Tasman,excursions to New Zealand are becoming more accessible for Australians.   Thehigh number of acquaintances that Australians and New Zealanders share meansthat Australians can rely on the hospitality of family and friends here in NewZealand, reducing their expenditure.

The wrong purpose

According to the International Visitor Survey (IVS), thenumber of Australian visitors to New Zealand increased by 102% over the decadeto June 2009[1].  Over the same period, total expenditure by Australian visitors increased byonly 64%.   So while the number of Australian visitors has increased, theaverage expenditure per visitor has declined, dampening the positive effectthat the increase in Australian visitors has on our domestic economy.

Graph 1.1

The underlying reason for the decline in averageexpenditure by Australians is due to the change in the make-up of Australianvisitors.   In the year to September 2002, 24% of all visitors from Australiacame to visit family and friends.   In the year to June 2009, the proportion ofAustralian visitors who came to visit family and friends had risen to 39%. Thisgrowth is shown clearly in Graph 1.1.   The year to June 2009 was the first timeon record that the number of people here to see family and friends was thegreatest source of arrivals from Australia, outstripping the number ofAustralians who came for a holiday.

Graph 1.2

At the end of 2002, before the number of people fromAustralia visiting friends and relatives started to grow rapidly, the average expenditureper night was $188 in today’s prices.   This figure fell to $143 per night forthe year to June 2009.   Average expenditure for the whole stay declined from$2,184 to $1,793 over this period (June 2009 prices).   So despite the number ofvisitors increasing, the marginal benefit for the New Zealand economy from anAustralian visitor has decreased by 18% over the last seven years.

Aussies or Kiwis?

Over the last few years there has been a large increase inthe flow of visitors to New Zealand from Australia, spurred by the reduction inairfare costs.   However, it has been the number of those coming to visitfriends or relatives that have seen the most dramatic growth in the lastdecade. Average expenditure in all "purpose of visit" categories has declinedsince June 1999.   But the higher proportion of visitors coming to see theiracquaintances has helped reduce the average expenditure of a visitor fromAustralia, dampening the positive effect on our economy of the lift inAustralian visitor numbers.

One possible explanation for the increase in the number ofpeople visiting friends and relatives is the growing number of New Zealandersliving in Australia.   Census data since 1976 shows that the number of NewZealand-born people living in Australia has risen from under 90,000 to almost390,000 over the last 30 years (averaging 5%pa growth over that period).   Thisgrowth corresponds with a 5.2%pa increase in the number of "Australian"visitors coming to New Zealand between 1979 and 2009.   The increasing number ofNew Zealanders in Australia, as a proportion of both Australia’s and NewZealand’s resident populations, is shown in Graph 1.3.

Graph 1.3

Figures on the nationality of Australian-resident touristsare not readily available beyond "Australian" and "other" categories.   But,surprisingly, Graph 1.4 shows that the proportion of visitors from Australiaidentifying themselves as being not of Australian nationality has held steadyat 30-35% since the mid-1990s.

Graph 1.4

Nevertheless, it is our view that the increasing number ofKiwis living across the Tasman has played a significant role in affecting themake-up of visitors coming from Australia, and has thus affected spendingpatterns.   The strong migration flow to Australia since 2005 appears to belinked to the increase in the number of people visiting friends and relativessince 2007.   We would expect this lift in the number of people visiting friendsand relatives to be maintained going forward.

[1]Data from the IVS paints a different picture of the arrival numbers to datafrom arrival and departure cards.   We believe the arrival and departure cardnumbers provide a better indicator of visitor numbers, but for the purpose ofunderstanding trends in visitor spending, we have chosen to use the IVS data.

Enjoyed this article?

You might like to subscribe to our newsletter and receive the latest news from Infometrics in your inbox. It’s free and we won’t ever spam you.