Economists warn domestic tourism may plummet in wake of trans-Tasman bubble

An airport departures board.
They say New Zealanders will head to Australia in colder months - meaning uneven spending in each country. Photo credit: Getty

Economists are warning that the resumption of trans-Tasman travel may not necessarily deliver the economic boon many are hoping for.

Tourism hotspots such as Queenstown and travel, tourism, and hospitality companies have been quick to greet the announcement that free travel across the Tasman will resume on 19 April.

Economist Benje Patterson, however, said the bubble's effects were likely to be uneven.

"Put simply - many Kiwi destinations may struggle to attract Aussie travellers during the colder months, and instead will miss out on New Zealanders who head to warmer destinations across the ditch."

He said ski-related regions such as Queenstown and the central North Island would most likely gain given Australians made up a large portion of overseas visitors wanting to ski during winter, but other regions would likely have to wait until the end of year and improved summer weather to attract more visitors.

He estimated broadly that if patronage returned to about 60 percent of pre-Covid levels the net gains for major centres could be close to $225 million compared to last year.

"Unfortunately under the scenario ... most of the rest of the country is likely to lose in net terms over the winter months," Patterson said.

He said Northland and Taupō would likely feel the least benefit, while the West Coast, Mackenzie Country, and Fiordland would also suffer.

Patterson said the picture would change markedly if the number of Australian visitors returned to pre-Covid levels.

The economist at investment bank Jarden Securities, John Carran, noted that the economic benefit might be dented by local consumers diverting their spending to an Australian holiday or choosing not to compete with Australian visitors.

He said the major corporate beneficiaries of the bubble were the obvious - Air New Zealand, Auckland, Wellington, and Christchurch airports, campervan and tourist attraction owner Tourism Holdings, and to a lesser extent hotel and entertainment companies such as Sky City, although the market reaction might well be muted.

"To a certain extent the market has been expecting the opening of borders and while this is a little earlier than some might have expected, a lot of that has already been baked into prices."

Carran said many of the companies would still be doing it tough as they looked to improve earnings and repair the damage Covid had done to their finances.