New Zealand’s tourism industry is booming.

The Prime Minister who is also Minister of Tourism made this point at his weekly post Cabinet press conference on Monday.

And Treasury produced a report which showed that after remaining steady around the 2.4-2.5 million mark between 2005 and 2011, the number of short term visitor arrivals to New Zealand has trended steadily upwards. 

“Travel services exports are the second largest export category by value after dairy exports and rising tourism expenditure has offset some of the lower national disposable income from depressed dairy prices,” the report says.

“On current trends, travel services export values may temporarily become the largest export category later this year.”

The latest data puts visitor arrivals in the year to May 2015 at 2.98 million, a 6.9% increase on the previous year and a new record level.

China (including Hong Kong) is New Zealand’s largest source of visitor arrivals growth, accounting for more than 40% of the increase in visitor arrivals since 2011

Since 2012 China has been the second largest source of visitor arrivals. 

While Australia is by far the largest source of visitor arrivals, it accounted for only a third of the increase, much less than its market share of 43-45%. 

The next four largest sources, the US, UK, Japan and Germany, contributed a further 8% to the increase, with the US contributing the lion’s share of this and visitor numbers from the UK actually declining over the five year period. 

And these new tourists are spending more.

Visitor expenditure has grown rapidly in the last year with around a third of that growth due to the solid growth in international visitor arrivals. 

Expenditure growth has also been supported by a longer average length of stay and increased average daily spend which have both also accounted for around a third of the increase each. 

Treasury concludes that with the rapid growth in Chinese arrivals expected to continue and Australia and other traditional markets providing a solid foundation, the trend in visitor arrivals is likely to remain positive for some time to come. 

“When the upward trends in visitor expenditure are added in, travel services exports growth is expected to remain strong in the medium term,” the report says.

“This is reflected in the Budget Update forecasts, where the services balance is expected to remain in surplus throughout the forecast period despite solid growth in services imports. 

“Furthermore, if the exchange rate continues to remain weaker than previously forecast, or oil prices remain lower for longer (impacting on airfare costs), New Zealand’s attractiveness as a destination could increase further. 

“Positive surprises to travel services exports could help mitigate some of the downside risks seen elsewhere in the current account.”