The Trans-Tasman Travel Bubble – Is its timing critical to recovery?

The Post Covid-19 Recovery

The establishment of a Trans-Tasman Travel Bubble and re-engagement of the Australian visitor to New Zealand has been widely identified as a key factor to lead the tourism industry to recovery. 

As of late May 2020, the Trans-Tasman Safe Border Group continue to work on proposals to the New Zealand and Australian Government, that equally share enthusiasm for travel to resume when safe.  Whilst advocacy groups have targeted 1 July 2020 as a potential date, Governments are yet to commit to a potential border reopening date.  We investigate whether timing will have a material impact on the recovery.

Will visitor arrival seasonality affect the recovery?

The seasonality of visitor arrivals from Australia, excluding those Visiting Friends and Relatives over the 2017 – 2019 calendar years is illustrated below:   

In general, Australian visitor arrivals are subject to isolated seasonality, with the months of May / June representing low periods,  while December is consistently a peak travel month, where a significant fall in business travel is offset by a large increase in leisure travel.  

Whilst Trans-Tasman travel is critical to kick-starting the tourism economy, due to the lack of seasonality, there is no date that necessarily disadvantages the early steps to recovery. 

Will seasonal room night demand affect the recovery?

Using 2019 Australian market data, monthly room night demand for major hotels markets is outlined below: 

Consistent with national visitor arrivals, for most regional centres, Australian room night demand appears to be subject to very limited seasonality. 

However, the exception is the Queenstown market where demand swells to an average of 27,750 room nights over July – September, corresponding with the winter ski season, which in 2019 contributed 16% to the achieved average occupancy rate of 83%. 

Conclusion

Whilst the Trans-Tasman Bubble is highly anticipated, the timing of its introduction is not expected to materially impact most regional markets. 

However, resumption of Trans-Tasman travel to allow for capture of trade during Queenstown’s peak ski season is likely to be a critical factor in providing an initial stimulus to recovery.