The United Kingdom Inbound Market to New Zealand - Case Study Example

United Kingdom Inbound Market to New Zealand Name: Institution: United Kingdom Inbound Market to New Zealand Introduction New Zealand has been among the top tourist destinations for European countries including United Kingdom. It has also provided a good inbound market for other Asian countries such as China, Korea and Japan amongst others. In the last few years, New Zealand has recorded growth in the inbound arrivals. This was especially so in 2011 when the country hosted the IRB Rugby World Cup. The following year recorded a drop, which signified a return to the regular levels. Currently, a new trend is emerging, where the country is recording an increase in inbound arrivals from Asian countries while westernized ones have recorded decrease (Tourismnewzealand.com, 2014). One if this country is United Kingdom whose inbound arrivals in New Zealand are expected to continue dropping by a CARG of 4% in the near future. This can be explained by the financial and economic uncertainties in the European countries that were hard hit by the economic recession. Conversely, the total inbound arrivals are expected to grow by a CARG of 4% in the next few years. Much of this growth is expected from the developing Asian countries. Current Situation The performance of the United Kingdom’s inbound market to New Zealand has been beneficial to various sections of the country’s economic structure. This is because of various commercial subsections embedded in the operations of this industry. To begin with, an evaluation of the current situation of this inbound market indicates its role in the development of the hospitality industry and exportation subsection. For instance, in 2012, this inbound market contributed significantly to the placement of the entire tourism division in this country as the main foreign exchange earner. It recorded 1.6 % of all the goods and services exported to different international destinations (Dwyer & Forsyth, 2008). Similarly, it has resulted in augmented tariffs acquired by the local and federal administrations as well as increased employment rates. Based on recent surveys, the taxes obtained from the proceedings in this inbound market have increased considerably despite such political, ecological, and commercial upheaval as the earthquake experienced in Christchurch in 2011 and current effects of the global financial depression. Additionally, the effective strategies incorporated in the development efforts in the entire tourism sector in New Zealand have been beneficial to the United Kingdom’s inbound market in this geological zone. For instance, the technological advancements have facilitated the expansion of the range of visitors from the United Kingdom visiting various destinations within New Zealand. The advanced levels of technological components utilized in various subsections of the tourism industry in New Zealand has made it easy to advertise the available products to people in various social classifications (Zealand, Tourism Industry Association New Zealand, Tourism New Zealand & New Zealand Hotel Council, 2009). Subsequently, the increased number of aged tourists from various zones of the United Kingdom illustrates the enormous capacity of this industry, which requires effective and suitable strategies in order to attain its maximum potential. Based on current reports regarding this aspect, this population group tends to frequent certain destinations within this area in addition to enjoying long holidays in different sections of the vast hospitality subdivision. Despite this satisfactory performance, the participants in this inbound market recognize the need to address the component of value in order to develop the commercial platform as well as the entire tourism industry in New Zealand. By analyzing the figures related to the arrivals from the United Kingdom, the monetary resources acquired from these visitors as well as other main indicators of value ion such commercial frameworks have weakened. For instance, the number of arrivals from the United Kingdom in 2013 reduced by 1 % as compared to those recorded in 2012. Analysts have asserted that the Rugby World Cup in 2012 was a major facilitator of the developments within the nation’s tourism sector (Dwyer & Forsyth, 2008). Owing to this reduction in the value of products offered by the subsections in this industry, the type of visitors has changed considerably. For instance, the percentage of tourists whose intent is to tour different attraction sites and hotels in the country has decreased with that of foreigners visiting relatives and friends increasing in the recent past. New Zealand Tourism Industry Statistics Tourism industry is one of the key economic factors in New Zealand, contributing 3.7% of the GDP, which translates to NZ$7.3 billion, in addition, it provides 110,800 jobs that represent 6% of the country’s total workforce. 16% of its international spending exports were from the tourism industry. Both international and domestic industry contributes NZ$24 billion to the country’s GDP (Steel, McWha, Briggs and Fan 2000). Its industry is marketed as green and adventurous. This is highlighted by its tourist destinations such as Milford Sound and the Abel Tasman National Park. Tourism activities such as whale watching and bungee jumping exemplify the natural world. Majority of New Zealand’s arrivals come through the Auckland Airport that handled about fifteen million passengers in 2013. Majority of the tourists take long journeys using couches or hired cars. Majority of its international tourists in order of size include Australia, China, United States, United Kingdom and Japan. The year ending 2012 recorded 191,360 tourists from United Kingdom. This figure declined to 190,816 at the end of 2013 (Steel, McWha, Briggs and Fan 2000). Growth of tourists was recorded from the other aforementioned countries. For instance, Australia that had majority of tourists in New Zealand saw an increase from 1,299,600 to 1,350,032 over the same period (Steel, McWha, Briggs and Fan 2000). New Zealand has seen an increase in the number of Unite Kingdom tourists over the years, in the two decades between 1979 and 2000, the number of British tourists in New Zealand increased from 28,664 to 160,514 at the end of 1999. This represents a percentage increase of 460%. However, the market share of tourists from United Kingdom for New Zealand did not grow as fast. In 1979, it was at 0.2% and increased to just 0.3% at the end of 1999. While New Zealand only holds a market share of 0.3%, other countries such as France and Spain held more than 20%, which makes them the major tourist destinations for British people. The other most important country was United States with a market share of 8% (Steel, McWha, Briggs and Fan 2000). This means that New Zealand holds just a small percentage compared to the main countries. However, the market share for Spain and France declined over the last 20th century decade (Tourismnewzealand.com, 2014). The increasing growth in the last two decades of the 20th century has not continued in the 21st century, since 2000, the number of British visitors has continued to reduce. Market forecasts indicate that this will continue from 2012 to 2019 at a rate of 1.6%. Between 2002 and 2012, the declined moved at a rate of 2.2% (Ministry of Business, Innovation & Employment 2013). The average spending per person from United Kingdom decreased as well. 2003-2013 statistics indicate that foreign spending from Britons reduced from approximately $5,250 in 2003 to $3,500 per person. Between 2003 and 2008, the spending per person was relatively stable playing between $4,500 and $5,500 (mbie.govt.nz, 2014). However, this was followed by a sharp decline from $5,500 at the start of 2008 to $3,500 in 2013 (Ministry of Business, Innovation & Employment 2013). This indicates that the economic downturn had a significant effect on the amount of spending from Briton visitors. Factors Affecting the Tourism Demand Many factors affect tourism in any country. The United Kingdom inbound Market to New Zealand is affected by unique as well as common factors found in other markets (Britain Inbound, 2009). Looking at tourism from a systems theory perspective, several factors affecting this market can be identified. The systems theory views tourism as something that contains several interrelated parts that work together to achieve the same goal. When one is missing, the whole operation becomes impossible. This theory suggests that tourism is made up of several component parts that function together to influence the whole industry (Steel, McWha, Briggs and Fan 2000). These component parts include tourists, companies and destinations. It is interrelated through supply and demand, with dynamics being the nature of tourism changes in the years. It is also comprised of external factors that include politics, technological, social and economics. The components and external factors are very crucial in determining the performance of tourism anywhere. For instance, lack of political stability makes a tourist destination unfavourable, hence reducing the number of visitors. Component Parts To understand how United Kingdom inbound market to New Zealand is affected, it is important to look at the component parts. The first component part is tourists. Without tourists, there would be no tourism. Tourists are the people who travel to the destinations identified. For instance, Briton tourists to New Zealand will visit specific parts with attractive activities such as whale watching. The first step in tourism is having travellers who are interested in visiting certain areas of a country. The next component is tour companies that offer the travellers several amenities such as transport and accommodation. Some of these companied include hotels and transport coaches or car hire firms. As aforementioned, majority of Briton visitors to New Zealand prefer couch services and car hire for transport. The final component is the destinations chosen by visitors. These are places where the tourists visit during their stay in the country. Some of these destinations include Milford Sound and the Abel Tasman National Park. In a survey conducted over attitudes towards holidays, it was found that 70% of the respondents chose their destination according to natural scenic beauty. This means that having many natural tourist destinations is very crucial for attracting Briton visitors (Britain Inbound, 2009). In addition, majority cited they love exploring new places a part from visiting the new ones. This means that the more places New Zealand has the more it is likely to attract visitors from this market. After the component parts, there is an interrelation between the tourist and companies. The companies supply destinations for tourists to visit. The tourists on the other hand demand to visit beautiful sceneries and famous places in the country. This achieves the demand and supply interrelationship (Steel, McWha, Briggs and Fan 2000). Dynamics in this industry include the changes that occur over the years due to varying factors. Some of the factors contributing to the dynamics include the tourist preferences and the external factors. One of the changes occurring over the years is the approach to tourism (Britain Inbound, 2009). Traditionally, the travel industries were in charge where tourists paid for standardized packages. Additionally, it was tailored to attraction cites. However, this has changed where the customers are in charge of their won travel, with the focus shifting from attraction sited to experience based (EuroMonitor, 2013). The external factors have a higher influence over the tourism industry as discussed below. Economic Factor One of the main factors affecting the growth of this market is the economic growth. United Kingdom’s economy is a major factor for people travelling to New Zealand. Statistics indicate that fluctuations in the United Kingdom’s economic activities cause a bigger effect to people visiting New Zealand. This indicates that this market is highly elastic. There is a correlation between high-income growth and an increase in the number of people visiting New Zealand (Steel, McWha, Briggs and Fan 2000). One of the main reasons is that overseas travel is more feasible with higher income. This can be explained by the fact that lower income contributes to slower airline ticket sales. Considering that long flights are required to travel to New Zealand, this becomes a huge factor (mbie.govt.nz, 2014). The recent economic recession has been one of the major factors in reducing income in many countries. United Kingdom was one of the hard hit areas and is yet to recover. This uncertainty has seen many people reluctant to spend most of their savings. Research has indicated that almost half of all Britons are not planning to take any holidays within the next coming year (Britain Inbound 2009). Of the rest of the half, 21% said they would only take holidays near home. This indicates that majority are avoiding expensive holidays this year. Others cited that their reason for not visiting overseas countries over the holidays was due to the increasing costs. Additionally, the economic recession left many people without employment, hence little money for spending on holidays. Businesses slowed down as people reduced their spending due to such incidents. Considering that economic growth in United Kingdom has a high correlation to number of tourists visiting New Zealand, it is not likely that New Zealand will increase its market share. This is because United Kingdom economy is mature, meaning it will experience little growth (EuroMonitor, 2013). Lack of growth in this market translates to lower visitors. This has been indicated by the comparison between number of Britons arriving in the country before and after the global economic recession. Exchange Rates In addition to economic growth, exchange rates play a crucial role in determining travel to New Zealand. Generally, an appreciation of the traveller’s currency against the destination country results in an increase in the number of tourists visiting the area. When the exchange rate is lower, the holiday becomes less expensive since one can buy more for less. During the 1990s, the United Kingdom pound had appreciated against the NZ$, which translated into an increase of the number of Britons visiting the area. Recently, the pound has not been performing well, which has made it more expensive for the Britons. However, statistics indicates that the exchange rate is not quite influential as economic growth. Technological Factors Technological factors are crucial in tourism especially in this market. In the survey conducted to find out the attitude of people towards holidays, it was found that majority of the people prefer a flexible and easy way of booking their travel (Britain Inbound, 2009). Internet was one of the most favoured means of booking travel. 45% of the respondents agreed that internet is a same way of booking their travel as opposed to 18% who thought it was not (Britain Inbound, 2009). In addition, the tourists are interested in facilities that make their holiday more exciting and relaxing. Dome of these facilities include infrastructure that is necessary for easy travel many tourists want to connect from one region of the country to another. Therefore, proper transport is necessary, which is facilitated by good infrastructure. Social Factors Research indicates that no tourists want to visit a country that has hostile people. Majority of the tourists from United Kingdom are interested in visiting countries where the people are welcoming and easy to associate (TNS, 2013). This makes them feel at home. Culture and traditions also affect the tourist industry in New Zealand. Majority of the tourists coming from Britain are interested in seeing cultural heritage cites (Britain Inbound, 2009). The attitude survey research indicated that 46% of the respondents agreed that the welcoming nature of the locals was a factor when selecting the destination (TNS, 2013). Other external factors such as politics also play an important role as well. However, this does not seem much of an influence considering that New Zealand has been politically stable for many years. It adopts the Britain political system, which makes it relatively similar with United Kingdom. Future Strategies Although the United Kingdom’s inbound market to New Zealand has illustrated overwhelming progress in the recent pasts, there are certain proposed strategies that will aid in improving the current level of performance. One such component entails targeting high value tourists. For example, the hospitality subsection, which is a crucial partner in the development efforts of the broad tourism industry in New Zealand, has been focusing on offering products that are suitable for business events. This is due to the realization that the arrivals from the United Kingdom are substantial in acquiring the expected developments in different divisions of the industry yet contain different components that have untapped potential. For this reason, this type of visitors is one of the population groups whose needs relate to the strategies put in place to increase the value of products offered in New Zealand’s tourism sector. This will be useful in increasing the amount of revenue acquired the local and federal governments as well as other participants including the labour force and business proprietors. For example, on average, conference delegates from different geological zones of the world spend more than $ 3,000 during their stay in the country (Zealand, Tourism Industry Association New Zealand, Tourism New Zealand & New Zealand Hotel Council, 2009). These figures are considerably higher than the expenses of leisure tourists. In addition, the participants of the tourism subsection in New Zealand seek to tap the maximum potential of the premium travel division of the United Kingdom’s inbound market. Currently, the available facilities and products serve a small percentage of premium travel visitors. However, with the incorporated strategies, the stakeholders of this industry will ensure that the available products are o high value in order to meet the needs of tourists who spend heftily in terms of transportation, accommodation, and purchasing of different products in the tourist attraction sites (Singh, 2010). By expanding the activities that concur with the interests of these foreigners, the market participants will increase their stay periods and frequency of travel, n aspect that will be beneficial to many involved parties. Based on these findings, the current performance of the united kingdom’ inbound market to New Zealand is bound to increase owing to the practical and suitable strategies incorporated in the development efforts. Conclusion The United Kingdom inbound market to New Zealand is currently experiencing a decline as indicated above. One of the main influences is the economic growth. The United Kingdom’s economic growth has a close relationship with the number of Britons visiting New Zealand. Another influencing factor is the exchange rate. When the pound appreciates against the NZ$, more Britons visit the country. However, this trend is changing, where the economic growth is playing a more influence on the number of visitors to New Zealand from United Kingdom. The current economic situation has caused a decline in the number of Britons taking holidays. Majority have changed from overhaul to domestic destinations in order to save costs. Other factors that have become significant in the modern tourism are natural scenic places. Majority of people indicate that visiting natural scenic destinations is one of their first priorities. New Zealand scores well in this factor as it market its destinations as green and natural. Finally, it is evident that developing nations such as China and India are increasingly taking holidays as opposed to the mature markets. This is probably because of the growing economies, which are allowing people to increase their spending. References Britain Inbound. (2009). Britain Inbound Market & Trade Profile. Retrieved from http://www.visitbritain.org/Images/Inbound%202009_tcm139-167238.pdf Dwyer, L., & Forsyth, P. (March 01, 2008). Economic measures of tourism yield: what markets to target? International Journal of Tourism Research, 10, 2, 155-168. EuroMonitor. (2013). Tourism Flows Inbound in New Zealand. Retrieve from http://www.euromonitor.com/tourism-flows-inbound-in-new-zealand/report mbie.govt.nz. (2014). Tourism Report. Retrieved from http://www.mbie.govt.nz/what-we-do/business-growth-agenda/sectors-reports-series/tourism-report Ministry of Business, Innovations & Employment. (2013). New Zealand Sector Report 2013. New Zealand Government. New Zealand., Tourism Industry Association New Zealand., Tourism New Zealand (Organization), & New Zealand Hotel Council. (2009). Tourism industry monitor: Tracking the performance of the tourism sector. Wellington, N.Z.: Ministry of Tourism. Singh, S. P. (2010). International tourism development. Jaipur, India: ABD Publishers. Steel, D., McWha, V., Briggs, P. & Fan, E. (2000). New Zealand’s Market Share of International Tourism. NZ Institute of Economic Research (INC.). TNS. (2013). Holiday Attitudes 2013. Retrieved from http://www.tnsglobal.com/sites/default/files/TNS_HolidayAttitudes2013.pdf Tourismnewzealand.com. (2014). About the Tourism Industry. Retrieved from http://www.tourismnewzealand.com/about-the-tourism-industry/ Read More