The recent announcement by the tourism minister, that the International Visitor Levy will increase to $100 has caused some anxiety in New Zealand’s tourism industry.

“We recognise that something had to be done to help fund New Zealand’s ailing tourism infrastructure, but on the back of many other cost increases, both Government led (e.g. visa fees) and private, (e.g. increases in the cost of fuel, food, materials) we believe that an increase of this magnitude may be the straw that breaks tourism in New Zealand’s back,” says Ben McFadgen CEO of the Rental Vehicle Association of New Zealand.

“The Government stated that an $100 increase is unlikely to have a significant impact on visitor numbers. We take issue with that statement,” says McFadgen, “there was little if any robust analysis on the impact on demand that an increase such as this would cause. When you consider that overall, the cost increases faced by an international visitor when coming to New Zealand are now closer to $500 in total, not $100, and that’s not even accounting for the increased costs of food, fuel, vehicle hire, accommodation etc. we think New Zealand is going to have a problem. Tourism forecasts for 2024/25 are already down on 2023/24.

“However, they’ve made the decision, so we have to live with it” McFadgen says. “Our chief concern now is how the extra money coming in from the IVL will be spent. It is imperative that the money is spent on improving tourism infrastructure, not offset to replace baseline crown funding that agencies already receive. For example, the Department of Conservation. Conservation estate land is an important New Zealand cultural and natural asset. It’s not a tourism attraction. Making up a large portion of their funding from an elastic international tourism sector is a really bad idea.”

The Rental Vehicle Association is also concerned about the process for accessing and distributing funding. “It’s important that there is clear transparency by this government on where the money is going and that the focus is on infrastructure and infrastructure alone - not marketing and pretty websites that sell an ideal. The ideal won’t exist if people can’t access it, and with the border levy as it now is, their expectations for New Zealand tourism will be high. We need a robust, transparent and effective focus on future infrastructure spending.” Says Mr McFadgen.

“Arguably, the Government also needs a risk management plan on what it will do if international tourism numbers flatline because New Zealand isn’t delivering to expectations. Already international tourists are electing to go to Tasmania for the “New Zealand nature experience” due to the perception that New Zealand costs too much, yet delivers less. Middle Earth is 25 years old now. Tourism has moved on. We need to as well."

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