Local tourism operators are bullish on growth over the next 12 months, despite fears of a cooling economy and rising operational costs according to the latest MYOB Business Monitor survey.
Small-to-medium businesses in New Zealand’s tourism sector continue to demonstrate optimism in the face of trialling economic times.
And, as a result, the country’s startup ecosystem continues to foster new starters.
According to the latest results from the MYOB Business Monitor, nearly half (45 percent) of the tourism sector say they expect their business’ revenue to be up in 12 months’ time, while only 17 percent say they expect it to be down.
Thirty-five percent predict revenue or gross turnover will be the same this time next year.
The tourism industry’s expectations are more positive than the SME sector average, with only a third (32 percent) of all SME operators forecasting their revenue will be up in 12 months’ time, while 19 percent say it will be down.
The MYOB Business Monitor is a national survey of over 1,000 New Zealand small and medium business owners and managers, from sole traders to mid-sized companies, representing the major industry sectors.
Running since 2009, the MYOB Business Monitor is commissioned to independent market research firm Colmar Brunton.
The most recent survey ran in February/March 2019, measuring business performance and attitudes in areas such as profitability, cash flow, pipeline, technology usage and the Government.
MYOB Country Manager, Ingrid Cronin Knight says the local tourism sector has been enjoying steady growth despite concerns among local SMEs about the direction of the economy.
“The tourism industry is New Zealand’s largest export industry, employing one in seven Kiwis,” she said.
“It’s critical to our economy, and although international trade concerns, new legislation around tax, and threats to local and international security have certainly shaken the economy in recent months, it is important local tourism operators are confident enough to get on with business as usual.”
Confidence in the economy is also higher among tourism operators.
According to the survey, more than two fifths (43 percent) of the tourism sector expect the New Zealand economy to decline this year, while a third (32 percent) expect it to improve.
In contrast, nearly half (48 percent) of all SMEs say they expect the local economy to worsen over the next 12 months, while less than a fifth (19 percent) say it will increase.
“According to the survey, a third of tourism operators experienced revenue growth over the last 12 months,” said Cronin-Knight.
“While this is only slightly higher than the SME average, their performance over the last year has boosted confidence and the willingness to invest in growth throughout the sector.”
A fifth of the tourism sector say they will hire more full-time workers this year, while more than third (34 percent) say they will increase the amount they pay their staff.
A third will also look at increasing their prices over the next 12 months.
This compares to just nine percent of all SMEs who have indicated they will grow staff numbers this year, and 23 percent who say they will look at paying their staff more.
A quarter of all SMEs say they will be increasing their prices and margins on products or goods sold.
The tourism sector continues to face some key business pressures, including rising fuel prices, staying ahead of the competition and costs of attracting customers.
More than two fifths (42 percent) of businesses involved in the tourism industry say the cost of fuel will put extreme or quite a lot of pressure on their operations over the next 12 months, while 35 percent say the same about staying ahead of the competition.
Only a fifth (21 percent) say fuel prices will not have an impact on their business.
“The cost of fuel often hits tourism operators twice,” said Cronin-Knight.
“While they might feel the pinch themselves, the greater concern comes from the impact fuel costs can have on local and international tourists, given the industry is highly dependent on long-haul travel and a growing number of independent travellers who want to be
highly mobile while they are here.
“Despite rising commodity prices and growing compliance challenges, the survey indicates tourism operators will offset these costs by increasing their prices and expanding their product or service offerings.
“A fifth will also invest in IT systems over the next 12 months, which is likely to help with compliance and taxation obligations.”
It’s this in-market positivity that makes the tourism sector of particular importance to MYOB, which aims to foster the growth and development of all early stage ventures.
Another supporter of Kiwi startups, CreativeHQ is a leading startup accelerator in New Zealand, and has been running Lightning Lab innovation programs for the past five years.
This year will be the first time CreativeHQ offers a tourism industry specific Lightning Lab sponsored by MYOB alongside a number of tourism industry players. The three-month program will focus on creating an ecosystem that solves productivity, cultural, environmental and social challenges in the sector.
Ten ventures have been signed on to participate in Lighting Lab Tourism, gaining access to a large network of tourism and hospitality services experts and startup mentors.
At the end of their three months, each startup will have the opportunity to pitch for investment in front of some of the top angel investors and early-stage venture funds in the country.
In previous years, CreativeHQ has helped accelerate the growth of a number of high-value startups with its Lightning Lab initiative, including the likes of Sharesies, Dexibit, Mish Guru and Hnry.