Where were the school holiday spending hotspots?

The school holidays are behind us. Parents may be sighing with relief their dear children are no longer running riot, but many of our visitor destinations are back on tenterhooks as they wait to see whether the initial sugar rush of domestic travel can be sustained.

Over the two weeks of school holidays, there was exceptional growth in retail spending in many visitor hotspots. Nationwide spending was up just 2.9%pa on average across each of the two school holiday weeks, but Buller and South Wairarapa topped the charts with growth exceeding 20%pa.

Nipping close at their heals were other visitor meccas including: Taupo, Kaikoura, Mackenzie, Ruapehu, Westland, Kaipara, Thames-Coromandel, Hurunui (Hamner Springs), and the Far North.

The clear theme that emerged was that kiwis actively got out and explored their own backyard during the school holidays. Furthermore, people favoured more scenic destinations rather than the big smoke, with spending in Auckland and Wellington continuing its downward decline.

The only notable scenic destination which bucked the upward trend was Queenstown-Lakes, where even a 30% lift in spending by kiwis couldn’t offset the huge gap left by the absence of international visitors. Even so, for retailers to come within 10% of last year’s school holidays was a heartening result for Queenstown.

A weaker post-school holiday spending prognosis

The next few weeks are likely to see retail spending growth moderate across the country. In general terms, ongoing growth in retail spending will rely on households’ confidence in their financial positions. Barometers of this confidence will be statistics on how job numbers are holding up and how quickly people are signing up to benefits. At present both these measures have shown that there is currently surprising resilience in the labour market. Nevertheless, I am still wary that a second wave of job losses will mount as we wean ourselves off the government’s wage subsidy scheme over the coming months.

The prognosis for spending in visitor destinations is a mixed bag. Visitor destinations that usually rely more heavily on international visitor spending during term times are more at risk than others, as are places that are not conveniently located close to major urban areas.

For example, spending may hold up better in places such as the Coromandel, Wairarapa, Hamner Springs and Kaikoura. These areas are all within easy striking distance for city slickers from Auckland, Wellington and Christchurch looking to get away for the weekend. On the other hand, farther flung destinations, like Westland, Taranaki and Hawke’s Bay will have to really push their marketing game to ensure domestic travellers keep coming through winter to fill the gap.

Queenstown-Lakes will remain at the bottom for the time being, and tourism, retail and hospitality operators in town should prepare themselves for a low season this spring for the first time in years. Even if domestic visitor spending in Queenstown were to double, that would still only sustain about two thirds of usual tourism revenue for the area. The reality is that while many tourism operators will hunker down and survive, there is still a world of pain to come for a large number of operators and people relying on them for employment and downstream spending.