National Tourism Infrastructure Assessment – Summary

1. National Tourism Infrastructure Assessment – Summary April 2017

2. Why Conduct an Assessment? • Tourism 2025 aspirational goal of $41b annually • Tracking well ahead of target - $34.7b YE March 2016 • Moved rapidly from challenge of generating growth to challenge of managing growth • All parts of the tourism system need to scale up: • Industry to scale up in line with demand (products and services) • Infrastructure supporting tourism to be appropriately scaled up (visitor accommodation, airports, telecommunications, parking, public toilets, water and sewerage, road transport) Private sector can deliver to a greater or lesser degree, but public infrastructure is harder to activate

3. Infrastructure: Implications and Opportunities Get it wrong • Crowding, poor quality facilities, poor visitor experiences, reduced visitor satisfaction • Loss of public support (social licence) • Environmental degradation • Loss of business (economic growth foregone) • Less able to grow value over volume Get it right • Facilities aligned to quantity and quality tourism needs, increased satisfaction • Increased public support, better facilities for tourists and community • Investment in the environment • More able to grow value over volume (Tourism 2025 is achievable) As such, getting the provision of infrastructure right is a key strategic requirement

4. Multiple Infrastructure Responses MBIE Policy and Insight Work Project Palace Hotel Sector NZTE, TNZ Stocktake of tourism infrastructure, Mid-sized Tourism Facilities Fund, policy work on infrastructure needs Forecast demand for hotel accommodation in 5 centres. Identified significant investment requirements National Tourism Infrastructure Assessment TIA (and partners) Tourism CEO’s Report Local & Mixed Use AIRNZ, CIAL, AIAL, THL Mobile Black Spots Crown Fibre Identified significant shortfall of local government investment in local and mixed use infrastructure Tender process underway aimed at addressing tourism highway coverage and blackspots

5. TIA’s Response TIA‘s two stage response, each undertaken with funding partners and Deloitte as provider • National Tourism Infrastructure Assessment • Assessment of current infrastructure, including capacity constraints and capacity availability • Identify priority infrastructure needed to enable the industry to grow in line with the desired growth pathway • Identify systemic issues or barriers, that may be impeding the development of priority infrastructure, and solutions to enable investment • Mixed Use Project Pipeline • To identify examples of ‘local and mixed use’ tourism infrastructure projects that could be funded • Determine a rough order of costs for pipeline projects • Undertaken quickly to provide evidence of the ‘scale of the need’ within local government to inform government’s consideration of a Tourism Infrastructure Fund.

6. National Tourism Infrastructure Assessment - Methodology • Assembled data to allow analysis of infrastructure capacity and utilisation • Industry and local government survey (n=340) to TIA members and to local government with the support of LGNZ • In-depth consultations (n=25) with tourism operators, local government, commercial interests and industry groups • Analysis of applicable data sources for each infrastructure types. Includes tourism activity, and infrastructure demand and supply • From this, developed a Prioritisation Framework for assessing infrastructure priorities (nationally, and regionally, and which can be used for project-level assessment in due course.)

7. Development of the Prioritisation Framework • Tourism infrastructure is complex: • Wide array of potential investments each with higher or lower returns • Users of infrastructure are often a mix of tourists and residents • Beneficiaries of the investment not necessarily captured by the investor • The nature of the infrastructure needs varies widely from region to region • To accommodate this complexity, Prioritisation Framework was designed to include two main dimensions: • The impact on tourism of addressing the infrastructure gap • The level of coordination required to provide the infrastructure

8. The Prioritisation Framework: 7 Stages • Relative Constraint. Survey data used to indicate the level of constraint for 20 infrastructure types • Base Tourism Analysis. Degree to which the infrastructure type is used by visitors, e.g. broad user base (roads, water and sewerage) and narrower user groups (cruise facilities) • Gap Analysis. The difference between use and constraint analysis (1 and 2 above) • Tourism Impact Weighting. The degree to which the lack of the infrastructure will impact the level of tourism activity. Dimensions used: what is the ‘pulling power of the infrastructure; ability of the infrastructure to ‘unlock’ latent demand; to promote ‘high value’ tourism; and contribution of the infrastructure to underpin sustainability and resilience • Overall Tourism Impact. The overall rating of the impact on tourism if the infrastructure gap is addressed (product of 3 and 4 above) • Coordination Weighting. The level of need for government and industry coordination to bring about a reduction of the gap. Dimensions used: ability of revenue uplift to be captured by the investor; timescale for development; numbers of agencies or layers of government; and depth of market • Infrastructure Prioritisation. Each infrastructure type rated by overall tourism impact and coordination required (product of 5 and 6 above)

9. Prioritisation Framework: the Matrix High Impact of Addressing the Infrastructure Gap Low Low Level of Coordination Required High

10. The Outcome: National Priorities • Analysis conducted for 31 regions and 20 categories of tourism infrastructure. • The results at a national level are illustrated in this prioritisation map.

11. National Priorities Priority infrastructure types that will have wide impact if addressed and which require coordination to put in place (the top right quadrant): • Visitor Accommodation. Highest impact if gaps are not addressed. Mid level of coordination required, but not entirely able to be addressed by the market, at least in some circumstances. Identified by 19 regions and most acute in Auckland, Queenstown, Wellington, Canterbury and Dunedin, and across a range of accommodation types. • Airports and Related Facilities. High impact if gaps not addressed given the breadth of impact across the visitor base. Mid to high level of coordination required given the number of parties involved and the ownership models that include public ownership in many cases. It appears regional airports are more of a concern than the major gateway facilities. Regions where airports are a top issue include Gisborne, Wellington, West Coast and Northland. • Telecommunications. Mid to high tourism impact due the importance of being on-line while travelling for information, booking, social media, amongst others. Mid to high coordination required, with this an issue in many non-metropolitan areas where the markets for telecommunications services are relatively thin. Regions where telecommunications is a top issue include Waikato, Coromandel, West Coast, Northland and Bay of Plenty. • Car Parking. Mid to high impact if gaps not addressed and frequently cited by 12 regions with visitor experience and travel behaviours impacted. High level of coordination required, particularly in destinations with constrained space and/or high visitor load. Regions where car parking was a top issue include Queenstown, Auckland, Coromandel, Waikato and central Otago.

12. National Priorities (continued) • Public Toilets. Mid to high impact due to the breadth of impact across the visitor base and high level of gaps. High coordination requirement due to its public good characteristics and the lack of ability to exclude people from using public toilets. Regions where public toilets is a top issue include Queenstown, MacKenzie, Coromandel, Taupo and Ruapehu. • Water and Sewerage. Mid to high impact due to the breadth of use by visitors and with a range of issues involved, e.g. water quality, sewerage treatment, wastewater and overall overload of the system. High coordination requirement due to the provision of water and sewerage systems generally being provided by local government to meet the needs of residents. Regions where water and sewerage is a top issue includes Waikato, Northland, Coromandel and West Coast. • Road Transport. Mid to high tourism impact due to the breadth of use and the concentration of issues in Auckland which is both the most-visited city and New Zealand’s main gateway. High coordination load due to the public provision of roading, and also roading alternatives such as rail services to alleviate congestion. Concentrated in Auckland, with the airport route frequently cited, and also some of the regional corridors to neighbouring areas such as Matakana. Other needs include better signage, passing lanes, slow vehicle bays, signage, ‘keep left’ indicators and designated ‘tourist’ highways.

13. National Priorities (continued) • Other infrastructure types also require coordination and, while not having a ‘national’ impact, are important regionally, e.g. Cruise, Conference Facilities. These need case-by-case assessment. • Some infrastructure issues are broadly observed across New Zealand, while others are more narrowly felt. For instance, Visitor Accommodation is an issue for multiple regions whereas Road Transport is an issue primarily focussed in Auckland • Some infrastructure issues more prevalent in the South Island. For instance, Public Transport is an issue for 9 of 15 South Island regions vs 3 of 17 North Island regions • There were differences between metropolitan and the other regions. For instance, Public toilet issues were concentrated in regions, but not in Auckland, Wellington and Christchurch. Many Airport issues were in regions some distance from the main centres, reflecting both their reliance on the main gateways and the gaps in their own regional facilities.

14. Regional Priorities • The National view is relevant for informing overarching policy settings • The regional view will be most relevant for assessing the merits of addressing particular regional priorities or projects • The Prioritisation Framework methodology allows reporting regionally (although the depth of the data needs to be noted) The following set out key regional results as examples of the regional coverage of the research

15. Top 5 issues (impact dimension) – high visitation regions

16. Top five issues (impact dimension) - regions with greatest visitor to resident ratios (peak season)

17. Public Toilets - Top 5 Regions Maps showing the regions that are most highly rated for each of the seven priority infrastructure types are contained in the main report. This figure shows where Public Toilet issues are most concentrated.

18. Regional MatrixNorthland Maps for each region with sufficient data are set out in Appendix 1 of the main report. These highlight the considerable differences on what are priorities for each region.

19. Barriers Engagement with industry in the consultation process identified a number of considerations viewed as critical to the successful facilitation of tourism infrastructure investment: • Regulatory complexity and compliance costs – many local and central government processes and requirements in order to progress infrastructure developments (e.g. RMA, geotechnical and earthquake, health and safety, and various concessions and licences). These may increase the coordination burden for some projects. • Capacity and capability to manage and coordinate infrastructure development –perceived concern with the capacity and capability of councils or industry to coordinate infrastructure developments which may inhibit the ability to advance projects within the existing processes. • Communication of long term tourism infrastructure strategy and vision – having long term strategies and vision (between government and industry) plays a role in the development of solutions to infrastructure gaps. The lack of a strategy make priorities less clear to all stakeholders. • Lack of partnering options or incentives – perceived lack of partnering options and incentives in developing infrastructure. More partnering options (i.e. relationships between local government, central government and private investors) may help lower the coordination burden. • Public resistance to developments – in some instances, the ability of affected parties to challenge tourism infrastructure projects may impede progress.

20. Solutions Engagement with industry identified a number of considerations that the industry viewed as critical to the successful facilitation of tourism infrastructure investment: • National Solutions for Local Issues. There could be benefit in partnerships between central and local government address common infrastructure issues in multiple regions. For instance, if multiple regions identify a shortage of toilet capacity, local councils might work with central government to develop a standardised design to roll out across the country. • Leverage Off Other Projects. Future projects in priority areas could leverage off existing central or local government projects to increase efficiencies and reduce cost. For instance , signage projects could coordinate with other like projects, or local mobile coverage projects could leverage off the government’s current mobile coverage project. • Increased Use of Technology. Some infrastructure issues may be reduced or addressed by adopting innovative technology solutions, e.g. self drive cars. • Partnership Approaches. Partnership approaches for infrastructure development are underutilised in New Zealand. Scope for local government to form more partnerships with industry and Iwi to utilise resources for the benefit of the region. Council partnerships with industry may allow increased access to funding for infrastructure projects.

21. Mixed Use Project Pipeline • Undertaken for TIA by Deloitte. • 78 local Councils asked to provide a list of their planned and considered infrastructure projects which fit under the ‘local and mixed-use’ definition. • 47 councils responded, representing 95% of regional tourism expenditure • Key results: • 673 ‘local and mixed-use’ projects identified • 525 (78%) of these project assigned a cost estimate • $1.46b estimated value of the costed projects • Likely to be a significant underestimate of the overall national requirements. Designed to establish empirical evidence of the ‘scale of the issue’ to inform government consideration of the steps needed to ensure provision of tourism infrastructure

22. Key Findings Investment in the identified priority areas will be essential to New Zealand sustaining growth to enable achievement of the Tourism 2025 goal of $41b annually by 2025 (or before) The economic opportunity is significant and warrants endeavours to support developers and investors in overcoming the range of hurdles that exist for many infrastructure projects Achieving this will require navigating both commercial considerations (e.g. funding, financing, feasibility) and the coordination considerations (e.g. approvals, RMA, partnerships) Establishment of the Prioritisation Framework • The Prioritisation Framework provides an enduring methodology for assessing infrastructure projects (nationally, regionally and individual projects). • Assessment using the Framework will inform the development of project business cases, and the highlight why, and how, particularly effort will be needed to address the coordination constraints. Evidence of the Scale of the Issue • Identified that there is a large and diverse set of projects planned or desired in the priority infrastructure areas, as evidenced for the ‘local and mixed use’ infrastructure.

23. Key Findings (continued) Application of the Prioritisation Framework • Analysis using the Prioritisation Framework identified a set of national priorities, thereby establishing a empirical evidence of where the gaps are most acute and where the most effort is needed to address the gaps. • The analysis also established regional level evidence of where issues were most concentrated and the unique profile of priorities for each region. This highlighted the importance of each region assessing its own detailed priorities. Pursuing Better Coordination • Identified that the need for ‘coordination’ is a common attribute of many types of infrastructure, particularly for ‘local and mixed use’ infrastructure. Conversely, without this coordination, many important infrastructure development may not take place as needed by the tourism industry. • Identified that there is a role for government (central and local) to assist in overcoming the ‘coordination barrier’. • Identified tools for overcoming the ‘coordination barrier’, including the provision of funding, streamlining approval processes, undertaking projects on a joint stakeholder basis and bundling infrastructure design and build to achieve economies.

24. Next Steps for TIA • In conjunction with private and public sector stakeholders, lead the identification and development of executable initiatives, plans and funding for each of the prioritised infrastructure types. • Using the Prioritisation Framework, ensure industry, investors and government (central and local) are aligned and coordinated so that prioritisation of infrastructure projects nationally, regionally and/or on a case-by-case basis with individual projects, addresses the infrastructure gaps most important to the tourism industry. • Assess and apply solutions to remove or reduce the systemic barriers identified in the research.