NZ Losing Its Allure for Australian Tourists

Balinese surfers hold their sufboards during sunset at Kuta beach near Denpasar, on Indonesia's resort island of Bali on May 13, 2017. (Sonny Tumbelaka/AFP via Getty Images)

For as long as tourism records have been kept—almost 50 years ago—New Zealand has consistently been the most popular destination for Australians looking to holiday overseas. But not any more.

Indonesia—which overtook the United States as the second most popular in early 2014—now tops the list, with around 1.37 million Australians heading there last year (86 percent of them for a holiday), while 1.26 million travelled to New Zealand.

In comparison, just 43 percent of Australian visitors to New Zealand are on holiday, with 38 percent travelling to see friends or relatives.

Australian tourist numbers to both countries reached their peak in 2019 before declining sharply during the COVID-19 pandemic. While both destinations have recovered since then, Indonesia has returned to its pre-pandemic peak, while New Zealand’s growth has slowed since 2022, due in large part to major airlines shrinking their fleets during the pandemic.

Fewer Planes Means Fewer Tourists

“[Virgin, Qantas and Air New Zealand’s] supply hasn’t really changed significantly over that period, so not a real surprise to see those numbers flatlining,” Australian Travel Industry Association chief executive Dean Long said.

Overall, ABS figures show nearly 10 million Australians made a short-term trip overseas last year, compared with over 11 million in 2019.

The attraction of Australia for New Zealand holidaymakers hasn’t waned, with more than 1.27 million people making the trip west across the Tasman in 2023, making them the largest number of arrivals, followed by those from the U.S. (0.66 million) and the UK (0.60 million).

Since Bali is undoubtedly the destination for most Australians, it remains to be seen whether Indonesia retains its lead in the future since, starting this week, arrivals will have to pay a 150,000 Indonesian rupiah (about AU$14.7) charge for entering the region, in addition to a $50 visa-on-arrival payment.

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None of this is good news for New Zealand, which depends on tourism for a significant proportion of foreign exchange.

Late last year Tourism New Zealand launched a new campaign to attract visitors, featuring a 3.5 minute film made by Kiwi director and actor Taika Waititi and targeting visitors from the United States. It will also play on social media platforms in Australia, Germany, the UK and parts of Asia.

NZ Relies on Tourism for Foreign Exchange

Before the closure of its borders, international tourism was New Zealand’s largest source of foreign exchange, generating $41.4 billion, and accounting for 9.1 percent of the economy. The most recent figures available are for the year to March 2022, and show the industry generated $26.6 billion, falling to 5.1 percent of the economy.

The Labour government, in one of its last acts, cut Tourism Industry Aotearoa (TIA) funding by 13 percent, or $15 million—well beyond the two percent baseline cut demanded from other agencies. The agency has not had a funding increase for a decade, so its budget has gone backwards while global advertising costs have gone up.

“We need funding to be ready for the impact of weather events, to address capacity and infrastructure issues, and to provide technology and innovation to advance the industry,” TIA chief executive Rebecca Ingram said at the time.

Heading into the election, the National Party pledged to deliver practical initiatives “so tourism operators can get on with delivering world-class experiences and growing their businesses and the economy.”

These include creating a new Great Walk, broadening the working holiday visa, electrifying the New Zealand Cycle Trail, and investing $5 million over four years to promote regional events.