Tourism has had a rough few years, and for a region like Hawke’s Bay, home to many tourism operators and hospitality businesses, particularly in the food and wine space, the Covid-era has been an incredibly challenging time.
And it’s not like it’s over. We are still hanging around the tail-end of it, and the Government recently announced MIQ could be required again at the border. Thankfully at the time of writing, this is not a reality.
It was only a few months ago, in September, that testing for Covid at the border was dropped. And this is when everything changed for tourism again, according to Tākaro Trails owner Karen Greenslade.
The outfit, which offers a range of cycling tours, including tours to wineries for tastings, had been popular with international travellers. Covid was a real gut-punch in that respect, as international travellers booked through third party agents represented roughly 70% of their business pre-Covid. Like many others around the country, they had to do a complete pivot to the domestic market once the borders closed.
Greenslade said her own confidence in the future of the business had been pretty flat even after the border was opened again.
“Until the Government dropped the testing, international tourism didn’t kick in because people didn’t want to be turned away at the border. Since that happened it’s been really different. There are people coming and we are seeing it big time.”
In fact, the business, which she runs with her husband Rog, has been too busy. She suspects it’s the rush of people who had been booked to come in the Autumn of 2020, and then couldn’t. It appears that they’re now all redeeming their prior bookings, she says.
But while the international travellers are finally back, the last few years gave Karen and Rog the opportunity to rethink the business and learn the skills required to market domestically. And this has been a blessing in disguise. The domestic market will remain a strong pillar of the business going forward.
“Domestic was really strong because there were no options to head overseas and New Zealanders wanted to go places they hadn’t been before, and Hawke’s Bay ticked the box for a lot of people.
“The really strong markets are the Aucklanders and Wellingtonians and to a lesser extent the Bay of Plenty and Waikato. We are seen as the Mediterranean of New Zealand and people came expecting really good wine and food, and good weather. Cycling around the wineries was a big hit,” Greenslade says.
Hawke’s Bay did exceptionally well from the domestic tourism trade during the period of border closures, travel restrictions and Covid mandates, says Hamish Saxton, chief executive of Hawke’s Bay Tourism (HBT), which markets the region to the rest of New Zealand, particularly Wellington.
“This is because prior to the pandemic nearly 80% of the visitor spend was from the domestic market already. So, when we lost the international market, our domestic market grew and within that we continued to grow our market share.”
Statistics for the financial year ending June 2022 show that the region received 1.7 million domestic visitors, who spent $376 million, based on electronic card transaction data and who stayed an average of 2.6 nights.
Before Covid, marketing, which comes from Hawke’s Bay Regional Council funding and membership fees from around 200 organisations, was focussed on the Wellington region due to its proximity and also suitability for the Wellington consumer, he says.
“That was a smart move because that was the market we saw an increase in. Wellington will continue to be a focus, as will those other regions that are within a reasonable four-hour drive or so. Auckland remains a market of interest, with the desire to rebuild to full capacity with expansion of our air services.”
The spend from Wellington visitors for the year ending June 2022 was about $10 million more than for the year ending June 2019 (the most comparable year given the 2020/21 lockdowns and restrictions).
The Baycation campaign which Hawke’s Bay Tourism ran through Covid times, appears to have solidified this market too, again trading on that equivalence to wine and cycling regions abroad, Saxton says.
HBT’s post-Covid marketing received a significant boost from government funding. Hawke’s Bay received $700,000 from the Ministry of Business, Innovation and Employment via its Strategic Tourism Assets Protection Programme in 2020/21, and the following year successfully applied for $1 million from its Tourism Communities: Support, Recovery and Re-Set Plan.
Hamish Prins, chair of the Hawke’s Bay Tourism Industry Association and owner of Prinsy Tours, which runs transfers to high-end lodges and wine tours, says the Baycation campaign was a wise use of resources.
“That was absolutely amazing. It goes to show that if we throw a bit of money at it, it has a massive return for the whole region. Hawke’s Bay would have done better than other regions because of that. Without Hamish Saxton and the team doing that we would have had a very different ball game on our hands.”
There is still quite a significant constraint on the industry, due to low staffing levels, however.
For example, this season he’s booked to do wine tours for just 21 of the 80-odd cruise ships hitting Napier Port, because that is the most he can accommodate while keeping the service to a high standard. In the past he would have worked with many more, he says.
Prins says every winery and accommodation business has a shortage of staff and cleaners, and this is holding the sector back somewhat. People were forced to leave the industry due to Covid restrictions, and many had simply chosen not to come back. Adding to the problem is the fact that many of the Airbnbs around the Bay have been mopped up as emergency housing, he says.
Kim Thorp, who runs Black Barn winery and accommodation, and who was recently awarded Hawke’s Bay’s food and wine ‘legend’ status at F.A.W.C., said the shortage was no small thing.
“The key thing for hospo, and the whole industry really, is staff. It’s really really difficult. A number of restaurants are still choosing to be closed certain days a week, not because they don’t have customers, but because they can’t find staff.”
This is having knock on effects for the likes of Tākaro Trails, which can’t run winery cycle tours on Tuesdays as a result and this looks like it will be the case for the whole of summer.
Both Greenslade and Thorp say the new wave of staff will probably come when backpackers return in good numbers.
“Restaurants around the country were all full of young people from Europe. They were really well trained in the role. That’s missing at the moment,” Thorp says.
Despite this quite major obstacle to hitting the sector’s pre-Covid stride again, Thorp says there is a cautious optimism in the air, with the prospect of the first ‘normal’ summer for many years.
“From an accommodation point of view, ours is really steady and full over the coming months, predominantly domestic visits.”
He’s also noticed that anecdotally, people are making longer bookings, rather than just the usual two-night, fly in-fly out stay. Now bookings are often between three and seven days.
But while there will be more people travelling again it’s also more expensive. Thorp says we are going to see higher prices in restaurants, in accommodation and generally across the board.
“That’s the reality that’s hitting us now. I think some of the budget accommodation might be stung a bit as the cost-of-living bites.”
Saxton said despite rising costs, the current exchange rate makes New Zealand affordable for international visitors and even at home there would still be many people to whom tourism and travel remains very affordable.
Prins says prices are something that operators need to keep in mind because as lovely as the Bay is, there are plenty of other options out there for travellers.
“We have to watch that we don’t get too expensive and also that we don’t get too complacent. Hawke’s Bay has to be marketed and there has to be funding for marketing,” he says. But that doesn’t mean lowering margins, which would make businesses unsustainable over the longer term. “I wouldn’t go over inflation. Don’t try and cream it, be practical,” he says.
At present, Saxton says, forward bookings in the region are looking really positive for the businesses he works with. But the major yard stick used by Hawke’s Bay Tourism to evaluate the state of play is visitor spend, measured through tourist electronic card transactions, he says. And visitors aren’t just tourists, they could be just about anyone coming to town for any reason.
“Those visitors may be friends or family, they may be here for leisure, they may be here for an event, they may be here for a business event. There are myriad reasons to go somewhere and spend on accommodation and hospitality, transportation, activities, fuel and things related to a visit. So, the optimism is good.”
In fact, visitor spend in Hawke’s Bay as a total was at its highest ever level for the July 2020 to June 2021 period, Saxton says.
Greenslade said overall business was looking good, but added that major investment was needed on some of the Hawke’s Bay bike trails to future proof the region’s cycle tourism – for example, to avoid tourists staying in Havelock North having to cycle through the centre of Hastings to reach the wineries in Bridge Pa.
“We have got the online presence that we need to keep going with the domestic market. Whether they are going to continue to do local travel or start going overseas again, we’ll have to see.”
She says keeping nimble, flexible and having an open mindset is key.
Prins is optimistic that tourism is bouncing back, and revenue is growing again. If summer bookings continue the way they are, he thinks his business may reach 70% of the revenue it used to make pre-Covid. But there is an odd feeling that he is starting out from scratch again.
“It feels like it’s February and we are starting up as a new business because we don’t have our full staff, all your rates have to be looked at, health and safety has to be looked at, and so we are all starting off like a new business – and there are expenses with that.
“We have to keep growing and our concern is what happens if we take the foot off the pedal, where it could end up after this big wave has come. We are hoping it’s a continuous gentle wave,” he says.