Expert Shares Insights on Tourism Industry’s Road to Recovery in New Zealand

According to an industry expert, a key part of New Zealand’s tourism infrastructure will take over two years to recover before it returns to pre-pandemic levels.

Dan Alpe, CEO of Jucy, said that the worldwide shortage of new cars and industry rationalisation is set to leave New Zealand’s inventory of rental vehicles at around 30 to 40 percent of what it once used to be before the onset of the pandemic, causing rental prices to increase in the short-term.

Alpe’s rental business was heavily impacted during the pandemic, with revenues falling over 95 percent overnight.

According to Alpe, as supply chain shortages grew, many rental operators sold off most of their fleet and inflated the resale value of second-hand vehicles while doing so.

“The asset rationalisation we have seen in the vehicle rental industry provided a lifeline for some of the larger players; however, some of the second and third-tier companies have exited an unsustainable market,” said Alpe. “As a result, when we open our doors to international tourists next month, New Zealand will be missing a critical part of our infrastructure.”

“Replenishing this fleet will take us at least two years, and in the interim, we can expect prices to rise.”

Alpe shared that although some large industry players sold their campervans into the domestic market, Jucy’s camper inventory remains unaffected, with the majority placed into temporary storage.

Their experience operating in the Australian market when it reopened for travellers last month had provided Alpe and his team with several valuable insights.

“Our Australian operation had around three weeks’ notice before the borders reopened in February – similar to what NZ tourism businesses have had,” said Alpe. “What we have seen there was a significant government investment to incentivise aviation and bring capacity back in time for the tail end of their summer season.”

“In addition, the Australian government was well organised and was able to roll out aggressive tactical tourism campaigns targeting, in the first instance, the working holiday market with great effect. This meant that there was no gradual build, and leisure travel has bounced back straight away.”

“The immediate response from the market was much quicker than expected, and we have taken that learning on board and begun to scale up our New Zealand call centre already.

Alpe said that their bookings in Australia have been showing high demand for April and May. Based on this information, they expect New Zealand to have a similar response, given that airline capacity can match demand.

Currently, the average daily rate for car hire in Australia has risen by 95 percent, while bookings for March are at 115 percent of 2019 volumes for the same month, reflecting the shortage of rental cars.

With the upcoming school holidays approaching, self-drive tourism numbers can be expected to rise.

“Tourism operators around the country will be taking a leap of faith at the moment - investing in staffing and equipment resources at a time where their cash flow has been strained to the limit - the challenge at this point is that the revenue won’t hit their accounts until the visitors arrive,” said Alpe.

Alpe shared that around 25 percent of Jucy’s reservations were speculative, with international travellers planning trips to New Zealand even before any border announcements were made.

“What we are expecting to see is a number of working holiday visitors among the first arrivals here when the border reopens, many of whom will enter seasonal working environments.”

“Our European distributors tell us interest in New Zealand remains strong; however, we don’t expect to get high volumes of long-haul Northern Hemisphere travellers arriving until October onwards.”