While household spending has been bouncing back since COVID-19 restrictions have lifted, most households still remain cautious about making travel plans according to Westpac.
Westpac senior economist Satish Ranchhod said it isn’t seeing plans for domestic travel, despite the fact that international borders remain closed, signalling a big challenge for local travel retailers.
“The sector normally has around $41 billion of turnover each year. However, around 40 per cent of that is due to spending by international visitors, who are obviously absent now,” Ranchhod said.
“Many tourist businesses have refocused their marketing efforts on the domestic market… Unfortunately the lift in domestic spending looks like it will be well short of what’s needed to offset the loss of international tourists.”
Ranchhod said it was likely that domestic travel isn’t high on Kiwis’ agendas due to health concerns, or concerns around the overall economic outlook.
According to Westpac, a growing number of households reported a deteriorating financial position over the last year, and are increasingly nervous about where the economy is headed – with the latest ANZ business outlook report stating that New Zealand has just entered its first recession since 2010.
At the same time the hospitality sector, which was hit particularly hard with spending falling more than 90 per cent in April, bounced back with the easing of restrictions – though remained 9 per cent down on the same period last year.
“The number of New Zealanders planning to spend more in bars and clubs has rocketed higher and is now just shy of the record levels reached in 2016,” Ranchhod said.
“This lift in spending has been particularly strong among those aged 50 and over and among women. It’s been seen across all income groups but was largest among those earning less than $50,000 per annum.”