Sunday, November 3, 2024
New Zealand’s cruise tourism industry, which injected more than $1.3 billion into the economy last season, is facing a challenging future due to rising costs and regulatory pressures that may prompt cruise lines to seek alternative destinations. An industry-commissioned report, released on Friday, provided the first in-depth look at the economic impact of cruise tourism on New Zealand, revealing both the significant contributions and potential risks to the sector.
The report shows that passengers, crew, and cruise lines directly spent $637 million during the last financial year, while indirect and induced spending brought the total economic impact to nearly $1.3 billion. This influx of revenue supported close to 10,000 jobs across the country, providing $425 million in wages, and benefitting a wide range of industries from hospitality and retail to transportation and local tourism.
Despite the impressive contributions of cruise tourism, the industry warns that these gains could be jeopardized by rising costs and regulatory uncertainties. Cruise Lines International Association (CLIA) co-commissioned the report to offer a comprehensive overview of the cruise sector’s economic role in New Zealand. However, Joel Katz, Managing Director of CLIA Australasia, expressed concerns about the future outlook, noting a predicted decline in cruise visits and the subsequent impact on local businesses and jobs.
“We’re seeing a 20 percent decline in the coming season, with an even larger drop expected in the season after that,” Katz said. “This translates into hundreds of millions of dollars and thousands of jobs that could be lost if cruise ships aren’t able to come.”
Last season was a record-breaking one for New Zealand’s cruise industry, with over 1,000 ship visits and 1.5 million passenger visit days. According to Jacqui Lloyd, CEO of the New Zealand Cruise Association, cruise liners consider New Zealand an attractive destination due to its unique cultural experiences and scenic landscapes. However, Lloyd pointed out that the rising costs of visiting New Zealand, combined with regulatory challenges, are deterring cruise lines from returning.
“New Zealand has become one of the most expensive regions for cruise liners to visit,” Lloyd said. “Costs are increasing unpredictably, which makes it challenging for cruise lines to plan effectively. They’re telling us they’re looking at other destinations.”
One of the biggest factors driving costs higher is a recent hike in the border levy, which has added $3.2 million in unbudgeted expenses for cruise lines this season. This increase was implemented within the booking window of a cruise trip, meaning that cruise lines must absorb the added costs without being able to pass them on to passengers who have already purchased tickets.
Lloyd explained that this additional expense impacts cruise lines’ profitability and could influence their decisions to prioritize other, more affordable destinations in the future. “The additional costs are increasing the financial burden on cruise lines, potentially making New Zealand a less viable option,” she added.
The report highlights the critical role that cruise tourism plays in New Zealand’s economy, particularly in cities like Auckland, which received more than $600 million from cruise tourism in the last financial year, supporting 4,184 jobs. Annie Dundas, Destination Director at Tātaki Auckland Unlimited, emphasized the importance of cruises for the local economy, noting that cruises contribute to job creation and help support a wide range of businesses.
“Cruises offer people a chance to experience Auckland briefly, and we know anecdotally that there’s a high rate of repeat visitation,” Dundas said. “The economic impact goes beyond the immediate spending; it supports jobs from hotel staff to restaurant workers, tour operators, and even accountants who manage the financial aspects of these businesses.”
Dundas also highlighted the efforts being made to collaborate with cruise lines to ensure that New Zealand remains an attractive and sustainable destination. “There’s a lot of work going on to help cruise lines meet climate goals and adopt sustainable practices. It’s concerning to see the potential drop in visitor numbers because that affects everyone in the tourism ecosystem.”
The Restaurant Association of New Zealand has also noted the significant benefits cruise ships bring to local communities. According to CEO Marisa Bidois, cruise passengers contribute substantially to the local economy, with each visitor spending an average of $283 per day on activities, shopping, dining, and exploring attractions.
“Cruise tourism is a big boost for our hospitality sector. From cafes and fine dining restaurants to food trucks and local markets, businesses see a noticeable increase in trade when a cruise ship docks,” Bidois said. “This spending benefits not only tour operators and hotels but also small retailers, farmers, and food producers who make our regions unique.”
As New Zealand faces rising costs and regulatory challenges, industry leaders are calling for greater collaboration between the government and the cruise sector to ensure the long-term sustainability and competitiveness of the industry. Debbie Summers, Executive Director of ID New Zealand Cruise, expressed concerns that global demand for cruises is booming, but New Zealand may lose out if it becomes too expensive or challenging for cruise lines to visit.
“New Zealand has become complacent and costly,” Summers warned. “The demand for cruises is higher than ever worldwide, but if we’re not able to make the business environment more favorable, these cruise lines will go elsewhere, taking their economic impact with them.”
The report, which was co-commissioned by CLIA and other industry stakeholders, is intended to be an annual publication that will track the economic impact of the cruise industry and highlight any emerging challenges. Katz emphasized the importance of continuing to quantify the cruise sector’s contributions and the potential costs of not addressing the rising expenses and regulatory issues.
“It’s crucial for us to have this data to show what’s at stake if the settings aren’t right. We want to continue this report as a regular feature to help guide decision-making and ensure that New Zealand remains open and attractive to cruise lines,” Katz said.
As New Zealand navigates the complexities of rising costs and regulatory pressures, the future of its cruise industry will likely depend on strategic adjustments that balance economic gains with operational feasibility. Collaboration between the government, industry stakeholders, and local businesses will be essential to maintain New Zealand’s status as a desirable cruise destination.
With cruise tourism contributing significantly to the country’s economy and supporting thousands of jobs, New Zealand faces a critical juncture in ensuring that this industry remains viable in the face of rising costs and competitive pressures. By addressing these challenges head-on, New Zealand can continue to benefit from the substantial economic impact of cruise tourism while promoting sustainable growth for years to come.
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