It almost beggars belief that New Zealand’s iconic great walks are simultaneously in very high demand, both by locals and tourists, and losing millions of dollars per year.
Track maintenance is expensive, as is keeping up the huts. Most of those costs will be fixed rather than variable, but congestion in the huts will depend on demand. Increasing the price could do the trick – unless they’re already into the inelastic part of the demand curve where the increase in revenue per visitor is outweighed by the loss in custom.
Tourism providers think there’s room for a private-public partnership. They’re almost certainly right. The contract with any provider could stipulate maximum prices for those accessing traditional facilities on a New Zealand passport while giving the provider freedom to set higher prices for international tourists and to upgrade kit to suit those tourists’ needs.
The eight Great Walks managed by the Department of Conservation (DOC) lost more than $3 million in the last financial year, despite a 12 percent increase on the previous year in visitor numbers.
DOC huts on the routes are already available, subject to a fee, but there is also some accommodation run by private operators.
The report said the model of working with the private sector was strong, and had more potential.
“The model could be logically extended to differentiated pricing for access to iconic scenic sites for international tourists, and working with private providers to develop commercial models for a wider range of infrastructure.”
This could happen without sacrificing the public right to access to the conservation estate, it said.
Tourism Holdings chief executive Grant Webster said there was room to bring more commercial rigour to how the walks were operated.
“It’s just bringing some greater commercial discipline, is our suggestion in that place. We haven’t invested the time and effort in this just for it to be put on a table somewhere. We’re very keen to continue to work with government to try to get these philosophies in place. We believe in them.”
I can understand sensitivity about maintaining broad access to things that many Kiwis see as part of their birthright. But that’s better done by putting differential fees on locals and visitors than by running losses providing fantastic experiences for tourists subsidised by general taxation. And letting private capital run the thing – contracted to maintain certain access requirements for locals – allows more innovation in delivery.
It seems a pretty obvious solution.