Tourism rebounding but Brad Olsen warns New Zealand is 'years away' from reaching pre-COVID levels

An independent economist warns New Zealand is still "years away" from reaching pre-COVID-19 tourism levels. 

It comes as foreign tourist spending in New Zealand in 2022 was up 62 percent ($6.5 billion) from 2021, but that's still nearly 60 percent below pre-pandemic levels, meaning the recovery still has a way to go. 

Infometrics Principal Economist Brad Olsen told AM Early on Monday after a "speedy increase" in tourism numbers as COVID-19 restrictions were eased, the recovery has started to plateau. 

"A pretty good recovery so far, but what we have seen in recent months is after a very speedy increase in those tourism traveller numbers coming into the country, they have started to plateau off a little bit more," Olsen told AM Early host Michael O'Keefe. 

"Coming through to January, they were only at 67 percent of normal levels. Again, nothing wrong with that, but certainly not the same level of growth and recovery that we saw throughout parts of 2022." 

Olsen is putting the plateauing of tourism numbers down to high inflation and interest rates around the world, which is putting pressure on household budgets. 

He warned these problems will result in New Zealand not reaching pre-pandemic tourism levels for many "years" yet. 

"I think it's actually still years away, in a sense, which is a bit hard to stomach given how quickly we've already got to say, two-thirds of normal levels, but what we are seeing across the world in terms of travel bookings is that we're still below pre-pandemic levels," Olsen said. 

"What does seem to be the case is that a lot of people have saved a lot of money during the pandemic, and they're spending that now … often buying, maybe a business class or some of those flasher fares. They're spending a bit more cash on travel, but this year, there does seem to be a bit more of a slowdown."

Olsen said New Zealand has welcomed a lot of Australians back since restrictions were eased, but we are in desperate need of the "big spending" Chinese and North American travellers. 

"In New Zealand, what we're also seeing is that we're waiting for some of those higher-spending tourists to come back. We've seen a lot of Aussies are coming over, which is fantastic to see the cousins from across the ditch, but they're not quite as big spenders as say people from North America or China," Olsen told AM Early. 

"International travel spending is still sitting 60 percent below what it would be throughout 2019 before the pandemic hit. So more people, but not quite as much money coming into the country yet and a while before we get anywhere back to normal." 

Infometrics Principal Economist Brad Olsen.
Infometrics Principal Economist Brad Olsen. Photo credit: AM

Before COVID-19, tourism was New Zealand's largest export industry and delivered $40.9 billion to the country and directly employed 8.4 percent (229,566 people) of the New Zealand workforce, according to Tourism New Zealand.

Olsen warned because of high airline and accommodation costs, New Zealand's tourism recovery will feel "more restrained" this year. 

"All of that means that despite the fact you are seeing that travel recovery continue on in 2023, that recovery will, in my mind, feel more restrained than what we saw last year."

Watch the full interview with Brad Olsen in the video above.