Too Many People Are Going to New Zealand. And That's a Problem

• Visitor boom puts infrastructure, environment under pressure

• Hotel shortage highlights need for investment in growth driver

When their flight home to the U.S. from Auckland was delayed last month, a group of 53 elderly American tourists was put up in a traditional Maori meeting house for the night because all the city’s hotels were full.

The visitors were welcomed by an elder, given biscuits and a cup of tea before being shown to their sleeping arrangements — mattresses on the floor of the tennis court-sized hall adorned with Maori wood carvings.

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“We were joking with them that it was a bit like being young again at an American holiday camp,” said Jenny Nuku, treasurer of the Maori community center, called Te Puea Marae. “They all were laughing.”

While the alternative accommodation made for a unique cultural experience, it illustrates how New Zealand’s tourism boom is stretching infrastructure to breaking point. With 3.5 million short-term arrivals last year — 480,000 more than had been projected only two years earlier — a lack of capacity may end up harming the nation’s biggest foreign exchange earner.

Scenic walks across volcanic plateaus and through snow-capped alpine valleys are becoming congested, while small towns servicing adventure activities like jet-boat rides down surging rivers or guided walks across 7,000-year-old glaciers are finding their sewerage systems over-loaded.

“If we don’t fix these things and look to the long term, we’ll be putting a cap on our own growth,” said Quinton Hall, chief executive officer of Ngai Tahu Tourism, one of the country’s biggest adventure tourism operators. “We’ve got a natural cap on our peak period right now because we just don’t have the accommodation in New Zealand. Even if they wanted to come, they couldn’t find anywhere to sleep.”

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No Room at the Inn

Tourist numbers jumped 12 percent in 2016 and are forecast to reach 4.5 million by 2022 — almost matching the country’s current population of 4.7 million. Government research last year identified a likely shortage of more than 4,500 hotel rooms by 2025, after taking into account existing construction plans for about 5,200 new rooms.

Hotel occupancy in Auckland averages 94 percent in February and about 86 percent over the year, with the nation’s largest city frequently full.

“If immediate solutions aren’t found, it is unlikely we will continue to grow at current levels,” said Dean Humphries, national director of hotels at Colliers International. “If we are going to continue to see more tourists come into the country, where do they go?”

In the regions, the influx is causing different problems, with infrastructure like car parks and toilets straining under the load.

Volcanic Plateau

At the 19.4-kilometer (12-mile) Tongariro Alpine Crossing, a track through a World Heritage Area on the central North Island volcanic plateau, thousands of tourists are overwhelming facilities designed to be used by a few hundred people a day.

In Glenorchy, near Queenstown, where Ngai Tahu offers jet-boating, canoing and horseback trail rides, the company is forced to bring in chemical toilets during peak season because the small town’s waste-water facilities are insufficient.

There’s a similar issue at Franz Josef, the South Island township near the spectacular glacier of the same name, where untreated sewerage was pumped into a nearby river after a surge in tourist numbers.

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The overloading is fueling concern that a bad tourist experience will harm New Zealand’s clean-green image and dent an industry that earned NZ$14.5 billion ($10 billion) from foreign visitors last year — a fifth of all export receipts.

Funding the infrastructure that’s required is now sparking debate.

Remote Attractions

Many of New Zealand’s natural attractions are remote, and the nearest towns don’t generate enough local taxes to pay for the car parks and rest stops visitors need. The association representing tourism operators wants the government to stump up more cash, noting that foreign tourists generate NZ$1.15 billion annually in sales taxes alone.

Christopher Luxon, Air New Zealand’s chief executive officer, said last year he supported a national bed tax and a border levy on visitors to help fund tourism investment.

There are also growing calls for visitors to pay to enter national parks, as they do most days at the Yellowstone and Grand Canyon national parks in the U.S.

“We provide all sorts of things free of entry, but not free of costs,” said David Simmons, professor of tourism at Lincoln University in Christchurch. “We need an informed discussion about user pays.”

Solving the accommodation shortage will be in the hands of private investors such asAuckland International Airport Ltd. and Tainui Group Holdings. They are building a 250-room five-star hotel near the international terminal under Accor SA’s Pullman brand, due to open in late 2019.

Until then, Jenny Nuku can expect more calls for emergency lodgings at Te Puea Marae, whose entire hall can be rented for NZ$500 a day. That’s less than NZ$10 per person for the 53 American tourists who bedded down there last month, and got the added bonus of an authentic encounter with Maori culture.

“They said they’d traveled around New Zealand, and this was the first real cultural experience they’d had,” Nuku said with a chuckle. “They had their phones and iPads out, taking selfies. We were just happy to be of assistance.”

This article first appeared in Bloomberg