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The state of the industry: Sports, Tourism and Leisure

28 July 2017

Sports, Tourism and Leisure are growing in New Zealand. Tourism alone contributes $12.9 billion to the country's total GDP (accounting for 5.6 per cent), while a further $9.8 billion is contributed indirectly (statistics courtesy of the Ministry of Business, Innovation and Employment). Meanwhile, 74 per cent of adults take part in sport and recreation each week, and the industry contributes 2.3 per cent to our GDP, according to Sport NZ.

This is a strong level for now, but what about the future? We caught up with BDO Partner and Head of our Tourism, Sports and Leisure division, Richard Croucher, to find out his thoughts on where he believes the industry is going.

What's causing the tourism boom?

"Tourism New Zealand has got a strategy in place to get to $40 billion by 2025. They're already outstripping that revenue growth curve by a long way, and this is really exciting to see. There are a number of things that have contributed to this including increased access to New Zealand by major airlines, especially from China.

Major events such as the masters and recent rugby tours, as well as films such as Lord of the Rings and the Hobbit have also played their part in putting New Zealand on the map."

Lord of the Rings is one of many things that have contributed to New Zealand's tourism boom.


What challenges does this growth present?

"Growth, especially when it's as fast-paced as this, is always going to bring challenges along the way. The tourism industry needs to find a way of catering to more people while still keeping the quality of its product." This includes: 

  • Seasonality - BDO provides benchmarking services to help clients establish where the seasonal peaks and trends in tourism are. Such information is just one part of the picture which industry organisations use to develop strategies for effectively managing these peaks. For example, promoting tours and experiences in the regional areas helps alleviate some of the pressure experienced in the busier tourist centres at peak times. 
  • Growing sustainably - People are coming to New Zealand because it's a beautiful country. We need to protect these areas they're visiting otherwise they won't be tourist destinations for much longer.
  • The social economy - Social economy concepts such as Airbnb will soon extend to cars, networks and experiences. Clients will need to develop strategies for leveraging off the social economy, as well as ways to protect their core business from it. 
  • Technology - This will be huge both in terms of attracting people to New Zealand, understanding guest behaviour and maximising productivity. 
  • Chinese market - This is the big unknown, according to Richard. Although Australians lead the number of international visitors coming to New Zealand, the Chinese market far outstrips them in terms of dollars spent. The Ministry of Business, Innovation and Employment's New Zealand Tourism Forecasts for 2017-2023 predicts arrivals from across Australia will grow from 1.4 million last year to 1.8 million in 2023, with spend increasing to $3 billion in 2023. Compare this to forecasts on visitors from China. Here visitor numbers are expected to more than double from 410,000 last year to 913,000 in 2023. But the spend from this market is expected to be $4.3 billion, which is more than the Australian market - coming from around half the visitor numbers. The Chinese marketing opportunity is growing, but also changing, with many no longer coming in on organised tours. Instead, the number of Free Independent Travellers is on the rise. This itself presents a challenge with regards to marketing to these visitors and making sure they are catered for and safe once they are here. Understanding this market and ensuring a quality experience for them is key. 

What's the state of the sporting industry in New Zealand?

Tourism contributes just under $5 billion per annum (as reported by Sport NZ) and, according to Richard, this is driven in part from our success on the world stage. "Sport is part of New Zealand's DNA, we've done really well with things like the Americas Cup, and our rugby team continues to be the best in the world. This is helping to get New Zealand's profile out there, and contributing to the tourism boom as well."


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What can New Zealand do to stay competitive?

"The thing to remember with sport in New Zealand is that so much of it is underpinned by grassroots volunteering and not-for-profit organisations. It's imperative, therefore, that we develop and manage sport on the grassroots level, and ensure they continue to receive their fair share of funding. This will allow us to remain competitive and increase participation across the country."

"Infrastructure is also important to get right, and the proposed national stadium is really exciting. This will mean we can continue to get big international events like the rugby world cup in the future."

What are some of the recent trends to take the leisure industry?

"The leisure industry is also growing at a fast pace. There are a lot of gyms springing up all over the country, and the cost of membership is going down as well, which is helping to ramp up participation. The increase of 24 hour gyms has also been an interesting development in the market which has further contributed to increased participation. Personalisation is really taking off - those in yoga, pilates and personal training are using social media, especially Instagram, to get their profile out there."

"Leisure and tourism continue to work closely together, and outdoor recreation in particular is on the rise." In fact, a Skills Active report found that the outdoor recreation industry is worth $744 million. 

Clearly, there are a lot of growth opportunities in all three of these sectors for the coming years. But they bring challenges as well, and it's important to get the right advice to really make the most of what sports, tourism and leisure have to offer. If you want to know where you can go next, give BDO New Zealand's Sports, Tourism and Leisure team a call today on +64 9 379 2950 or contact us. They'll discuss your situation further, helping you to identify potential growth areas and find ways of doing it sustainably.