A PROFILE OF THE ACCOMMODATION SECTOR IN NEW ZEALAND. for ServiceIQ

A PROFILE OF THE ACCOMMODATION SECTOR IN NEW ZEALAND 2014 for ServiceIQ

This report is one of 11 Sector Profile Reports that ServiceIQ has developed about the 11 sectors in our gazetted coverage area. These reports aim to give an overview of each sector with a focus on economic contribution, characteristics of the workforce, skills and training, opportunities and challenges facing the sector and projections of economic contribution and employment over the next five years. They will be used to inform ServiceIQ s industry and sector advisory groups and as an input into ServiceIQ s Service Sector Workforce Development Plan. The Sector Profile Reports were prepared by Infometrics using data from official sources including the 2006 and 2013 Census, Business Demography, and GDP and modelling based on Infometrics Regional Industry Occupation Model. These data sources were supplemented with desk research and qualitative information where available. These reports should be considered alongside other pieces of work including detailed research on an individual sector, government strategies, and in-depth sector knowledge. ServiceIQ anticipates updating these profiles on an annual basis and would like to include an increasing amount of sector-specific information as we become aware of it and as more is available. For further information about the Sector Profile Reports, please contact: Jenny Connor Andrew Whiteford Industry Skills and Research Manager Senior Analyst ServiceIQ Infometrics jenny.connor@serviceiq.org.nz andreww@infometrics.co.nz Authorship This report has been prepared by: Andrew Whiteford (Senior Analyst), Dirk van Seventer (Senior Economist) and Benje Patterson (Economist) of Infometrics. All work and services rendered are at the request of, and for the purposes of ServiceIQ only. Neither Infometrics nor any of its employees accepts any responsibility on any grounds whatsoever, including negligence, to any other person or organisation. While every effort is made by Infometrics to ensure that the information, opinions, and forecasts are accurate and reliable, Infometrics shall not be liable for any adverse consequences of the client s decisions made in reliance of any report provided by Infometrics, nor shall Infometrics be held to have given or implied any warranty as to whether any report provided by Infometrics will assist in the performance of the client s functions. ServiceIQ All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form, or by any means including electronic, mechanical, photocopying, recording or otherwise, without the prior permission of ServiceIQ.

Sector profile: Accommodation 1 Table of contents Key highlights... 3 Unique characteristics... 3 Training... 4 Sector outlook... 4 1. INTRODUCTION... 6 Defining the accommodation sector... 6 Sub-sectors within the accommodation sector... 7 2. SECTOR PROFILE... 8 Employment trends to 2012... 8 Occupations... 9 Business units... 10 Size of businesses... 12 Geography... 12 Economic contribution... 13 Other indicators: guest nights... 14 3. INDUSTRY OUTLOOK...17 Outlook for the New Zealand economy... 17 Outlook for the accommodation sector... 18 Sector outlook... 18 Occupation outlook... 19 4. OPPORTUNITIES AND CHALLENGES...21 Issues identified by the sector... 21 Changing customer mix... 21 Technology... 21 Customer service... 21 Issues identified by Infometrics... 21 Overview of outlook and background... 21 International guest nights to slowly recover... 22 Domestic guest nights to continue rising... 22 5. DEMOGRAPHICS...23 Age... 23 Gender... 24 Highest qualification... 26 Ethnicity... 28 Country of birth... 30 Hours worked... 32

2 Sector profile: Accommodation sector 6. TRAINING...34 Age... 34 Gender... 36 Ethnicity... 37 Level of study... 38 Region... 39 Domain... 40 Provider-based training... 41 7. APPENDIX A. METHODOLOGY...42 Definitions of key industries and occupations... 42 Measuring employment in the accommodation sector... 42 Measuring demographic characteristics of sectors... 43 Methodology for estimating net demand replacement... 43 Infometrics Regional Industry Employment Model... 45 Output and employment forecasts by industry... 45

Sector profile: Accommodation 3 Executive summary Key highlights Approximately 31,300 people (or 24,300 FTEs) were employed in the accommodation sector in 2012. This was down from a peak of 34,300 in 2007, a decline of 9%. Over the past ten years employment has declined by 0.3% in the accommodation sector compared with an increase in employment in the national economy of 1.3%. The accommodation sector was harder hit by the recent recession than the national economy. The accommodation sector had about 5,800 business units in 2013, up from 5,200 ten years ago. Business growth was slower than in the national economy. The accommodation sector contributed $1,190 million (in 2010 prices) to New Zealand s gross domestic product in 2012. This amounted to 0.6% of national GDP. Over the ten years to 2012 GDP in the accommodation sector increased by only 0.7% per annum compared with 2.3% in the national economy. In 2012 GDP per FTE in the accommodation sector was less than half than in the national economy. Table 1. Summary indicators for accommodation sector Accommodation New Zealand Jobs FTEs Businesses GDP ($ million) Number in 2012 31,368 2,199,074 % growth 2002-2012 0.3% 1.3% Number in 2012 24,334 1,871,104 % growth 2002-2012 0.3% 1.3% Number in 2013 5,843 507,908 % growth 2003-2013 1.2% 1.8% Number in 2012 $1,197 $199,966 % growth 2002-2012 0.7% 2.3% Number in 2012 $49,207 $106,871 GDP per FTE % growth 2002-2012 0.4% 0.9% Unique characteristics The accommodation sector has a higher proportion of both younger (15-24 years) and older (55 years+) workers than the national economy. Female workers predominate in the accommodation sector, accounting for nearly 63% of workers. In the national economy, females account for 47% of workers. The female share has declined slightly over the past seven years. Asians have a considerably higher representation in the accommodation sector than in the national economy. They account for 15.6% of workers in accommodation compared with 11.1% in the national economy. Māori have the same representation with 11.2% of workers and Pasifika are slightly underrepresented with 4.9%.

4 Sector profile: Accommodation sector The accommodation sector employs relatively fewer New Zealand born workers compared to the national economy. Overseas born workers accounted for 35.9% of employees in accommodation compared with 28.3% in the national economy. The accommodation sector has a large number of part time roles and 33.5% of workers are employed part time. This is much higher than the equivalent rate of 21.1% in the national economy. Just over half (50.1%) of employees in the accommodation sector had no post school qualifications in 2013. This was a significantly higher proportion than in the national economy (43.4%). The number of workers with a degree or higher increased from 13.8% to 17.3% over the seven year period. Training ServiceIQ had 882 accommodation sector trainees at some point in 2013, which accounted for 4.1% of all ServiceIQ trainees. The majority (50.8%), of trainees in the accommodation sector are studying towards level 2 qualifications. By contrast, 63.1% of trainees across the whole of ServiceIQ are studying for level 2 qualifications. Only 17.3% of trainees in the accommodation sector are studying at level 4 and above. Māori comprise 16.4% and Pacific 9.3% of trainees in the accommodation sector. Sector outlook The number of people employed in the accommodation sector is expected to recover over the five years to 2017 as both domestic and international tourism grow in New Zealand. We forecast total employment in the sector to increase to approximately 34,500 from 31,400 in 2012. The occupations that will experience the highest number of job openings are hotel or motel manager (533 per year), commercial cleaner (155 per year) and hotel service manager (103 per year). Accommodation sector employment in Christchurch will climb rapidly as more accommodation capacity is rebuilt. Other growth in accommodation sector employment is initially likely to be concentrated in locations frequented by international visitors on shorter trips, such as Auckland, Rotorua, and Queenstown. Key contributors to these markets include Chinese and Australian visitors who have median stay lengths in New Zealand of four days and seven days respectively. The type of accommodation favoured by Chinese visitors is hotels, with 81% of Chinese visitors staying in hotels on holidays, compared with 45% of tourists in total. However, new Chinese government regulations banning low-cost package tours are likely to support increased growth in independent Chinese tourists over the coming years, which could boost demand for backpacker/hostel style accommodation. Rising levels of domestic tourism will initially support moderate growth in employment in the accommodation sector in other parts of New Zealand. However, more rapid growth in regional accommodation employment levels will not occur until there are sustained signs of a recovery to international visitor number on longer trips with more time to explore the country. Visitors in this category are typically from North America and Europe for example, the stay length of UK visitors is 20 days, while the typical US visitor stays for 10 days. With international visitor arrivals from the US and parts of Europe showing signs of growth over recent

Sector profile: Accommodation 5 quarters amid stabilising economic activity, we are optimistic that the initial stages of a recovery to longer staying visitors are underway. Rising visitor arrivals from the US and Europe will disproportionately push up demand for backpackers/hostels, as well as camping grounds and motel. A higher proportion of visitors from these regions stay in these types of facilities than visitors from elsewhere. Visitors from the US are also more likely to stay in a hotel at some point during their trip, with 56% of US tourists reporting spending at least one night in a hotel, compared with 45% of tourists in total.

6 Sector profile: Accommodation sector 1. INTRODUCTION This report presents a profile of the accommodation sector. It describes trends in employment, the basic characteristics of the sector and its employees, and the characteristics of its trainees and learners. It also provides an insight into the future and presents forecasts of employment growth. Unless otherwise stated this report presents data for calendar years. Defining the accommodation sector Official employment data sources are typically divided by either industry or occupation, but by themselves, neither is satisfactory for defining the ServiceIQ sectors. For example, if we defined the aviation sector purely in terms of aviation related industries such as air transport services we may not capture pilots who work in the agricultural support services doing aerial spraying. We have consequently used a combination of industries and occupations to define each of the ServiceIQ sectors. Further details of this approach are provided in the Appendix. In this study we have defined the accommodation sector as follows: 1. Persons employed in all occupations in the following industries: Accommodation (code H440000 in the 2006 Australia New Zealand Standard Industrial Classification) 2. Persons employed in all industries in the following occupations: Hotel or Motel Manager (code 141311 in the Australia New Zealand Standard Classification of Occupations) Hotel Service Manager (431411) Doorperson or Luggage Porter (431912) Definitions of these occupations and industries are provided in the Appendix. This definition has been chosen as it is the group of industries and occupations that most closely align with the ServiceIQ gazetted coverage of the accommodation sector. The gazetted coverage of the accommodation sector includes: all hotels, motels and other commercial accommodation establishments such as backpackers, hostels, holiday accommodation parks, bed and breakfast, lodges, resorts, halls of residence and apartments.

Sector profile: Accommodation 7 Subsectors within the accommodation sector This profile examines the accommodation sector as a whole but it is important to recognise that the sector is made up of a number of subsectors and each of these subsectors has unique characteristics. Therefore, while the statistics and analysis reflect the sector as a whole, they might not be reflective of each subsector. The main subsectors are: Hotels - businesses that provide the public with lodging, meals and refreshments, and in particular have liquor licenses to serve alcohol to people on the premises. Accommodation is provided on a room/suite basis. Some hotels provide facilities to host conferences and functions. The hotel sector also includes resorts but excludes motor inns and apartments. Motels - businesses that provide short-term accommodation in selfcontained units usually with cooking, bathroom and toilet facilities. They are designed to cater for motoring visitors with parking facilities outside or close to each unit. The motel sector also includes apartments, flats, chalets, villas and cottages. Backpackers - businesses that provide accommodation primarily on a per bed basis. Beds are provided in shared rooms (dormitories) or individual rooms. Generally there are shared bathroom and kitchen facilities. The backpacker sector also includes youth hostels, commercial ski lodges and Department of Conservation huts with this style of accommodation. Holiday parks - includes caravan parks and camping grounds. Some holiday parks also provide secondary accommodation such as cabins, tourist flats and backpacker style accommodation. Caravan parks provide powered sites for caravans and campervans with shared toilet, shower and laundry facilities. Camping grounds predominantly provide sites for campers and include commercial camping grounds as well as national parks where a site charge is levied.

8 Sector profile: Accommodation sector 2. SECTOR PROFILE Employment trends to 2012 Approximately 31,400 people were employed in the sector in 2012. This was down from a peak of 34,400 in 2007, a decline of 9%. The sector has been harder hit by the recession following the Global Financial Crisis than the rest of the New Zealand economy. Employment in the national economy increased by nearly 2% between 2007 and 2012. An outlook for the sector is provided in the section Outlook for the accommodation sector on page 18. Table 2. Total employment in the accommodation sector, 2001-2012 Year Accommodation New Zealand FTEs Jobs Change Jobs Change 2001 22,833 29,287 1,862,895 2002 23,634 30,314 3.5% 1,923,798 3.3% 2003 25,005 32,073 5.8% 1,979,437 2.9% 2004 25,791 33,081 3.1% 2,039,390 3.0% 2005 26,261 33,681 1.8% 2,108,155 3.4% 2006 26,153 33,539-0.4% 2,142,486 1.6% 2007 26,773 34,364 2.5% 2,184,802 2.0% 2008 26,529 34,080-0.8% 2,219,403 1.6% 2009 25,454 32,727-4.0% 2,167,989-2.3% 2010 25,392 32,679-0.1% 2,160,647-0.3% 2011 24,975 32,169-1.6% 2,180,241 0.9% 2012 24,334 31,368-2.5% 2,199,074 0.9% 2002-2012 0.3% 1.3% Figure 1. Total employment in the accommodation sector, 2001 to 2012 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 New Zealand Accommodation 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0

Sector profile: Accommodation 9 Occupations This section examines the growth in occupations in the accommodation sector. By drawing on data from the population census it is possible to split out employment in the sector to approximately 1,000 detailed occupational categories. In this section we report on an aggregation of those categories into eight broad categories as well as the numerically largest detailed occupations. Table 3 shows employment by broad occupations. Managers and labourers are the largest occupational categories in the sector, accounting for 33% and 25% of employment in 2012. Over the ten years to 2012, a net 150 managerial positions were created each year. There was a decline in the number of positions for community and personal service workers, technicians and trades workers and labourers. Table 3. Employment by broad occupation 1 Occupation Change 2002-2012 pa % of total 2002 2012 Jobs % 2012 Managers 8,954 10,453 150 1.6% 33.3% Professionals 1,182 2,032 85 5.6% 6.5% Technicians & Trades Workers 2,724 2,353-37 -1.5% 7.5% Community & Personal Service Workers 6,294 5,184-111 -1.9% 16.5% Clerical & Administrative Workers 2,769 2,770 0 0.0% 8.8% Sales Workers 426 589 16 3.3% 1.9% Machinery Operators & Drivers 86 129 4 4.1% 0.4% Labourers 7,879 7,858-2 0.0% 25.1% Total 30,314 31,368 105 0.3% 100.0% Employment Figure 2. Employment by broad occupation, 2002 and 2012 Managers Professionals Technicians & Trades Workers Community & Personal Service Workers Clerical & Administrative Workers Sales Workers 2002 2012 Machinery Operators & Drivers Labourers 0 2000 4000 6000 8000 10000 12000 1 This table shows change in employment between 2002 and 2012. Change is measured in per annum terms. The change in number of jobs per annum between 2002 and 2012 is equal to the difference between the value in 2012 and 2002 divided by 10.

10 Sector profile: Accommodation sector Table 4 shows employment in the 20 numerically largest occupations in the sector. The largest occupations are hotel or motel manager and commercial cleaner which account for 15.3% and 13.3% of employment in the sector, respectively. Collectively the top 20 occupations account for 77.4% of total employment in the sector. Table 4. Employment of top 20 occupations in the accommodation sector Occupation Employment % of total Change 2002-2012 pa employment, 2002 2012 2012 Number % Hotel or Motel Manager 4,786 5,298 15.3% 51 1.0% Commercial Cleaner 4,165 4,061 13.3% -10-0.3% Hotel Service Manager 2,106 2,013 6.7% -9-0.4% Waiter 2,054 1,312 6.5% -74-4.4% Commercial Housekeeper 1,764 2,013 5.6% 25 1.3% Chef 1,588 1,369 5.1% -22-1.5% Accommodation and Hospitality Managers nec 1,100 1,386 3.5% 29 2.3% Receptionist (General) 944 1,417 3.0% 47 4.1% Hotel or Motel Receptionist 856 389 2.7% -47-7.6% Kitchenhand 814 594 2.6% -22-3.1% Caravan Park and Camping Ground Manager 696 686 2.2% -1-0.1% Bar Attendant 692 371 2.2% -32-6.0% Doorperson or Luggage Porter 563 347 1.8% -22-4.7% Bed and Breakfast Operator 503 666 1.6% 16 2.8% Cook 330 220 1.1% -11-4.0% Corporate General Manager 281 400 0.9% 12 3.6% Café or Restaurant Manager 274 306 0.9% 3 1.1% General Clerk 263 224 0.8% -4-1.6% Laundry Worker (General) 255 175 0.8% -8-3.7% Chief Executive or Managing Director 230 306 0.7% 8 2.9% Top 20 occupations 24,267 23,554 77.4% -71-0.3% Business units There were nearly 6,000 business units in the sector in 2013. Figure 3 shows that the number of business units in the sector grew rapidly between 2001 and 2006 and then levelled off and declined slightly since 2010. The number of business units in the sector grew slower (1.2%) over the 10 years to 2013 than in the national economy (1.8%). The slower growth was a consequence of the accommodation sector being harder hit than the rest of the economy during the recent recession. During tough economic times there is usually a consolidation of businesses as those struggling get absorbed by stronger businesses. As the economy gains momentum over the next few years we expect new enterprises to emerge in the sector as individuals are prepared to make new investments in a recovering industry.

Sector profile: Accommodation 11 Figure 3. Number of business units in the accommodation sector, 2000-2013 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Statistics NZ Table 5. Number of business units (as at February) Change 02-13 pa 2003 2013 Number % Accommodation 5,186 5,843 66 1.2% New Zealand 426,829 507,908 8,108 1.8% Source: Statistics NZ

12 Sector profile: Accommodation sector Size of businesses On average business units in the accommodation sector are larger than in the national economy. Approximately 13% of business units in the sector had 10 or more employees in 2013, compared with 8% in the national economy. Large hotels would account for the higher prevalence of large businesses. Small enterprises are nevertheless important with businesses employing fewer than 10 people accounting for nearly 30% of employment in the sector. Table 6. Number of business units by number of employees Number % of total Employment Accommoda New Zealand Accommoda New Zealand Accommoda tion tion tion 0-5 4,599 442,363 78.7% 87.1% 5,519 6 to 9 511 26,403 8.7% 5.2% 3,577 10 to 19 386 21,254 6.6% 4.2% 4,631 20 to 49 244 11,832 4.2% 2.3% 6,093 50 to 99 63 3,657 1.1% 0.7% 3,446 100 and Over 41 2,399 0.7% 0.5% 8,102 Total 5,843 507,908 100.0% 100.0% 31,368 Source: Statistics NZ Geography Auckland is the region with the highest number of employees, accounting for 20.4% of employment in the accommodation sector in 2012. This was followed by Otago (14.2%) and Canterbury (12.4%). Over the 10 years to 2012 fastest growth was measured in Wellington (2.7%), Otago (2.1%), and Tasman/Nelson/Marlborough (1.3%). Table 7. Number of employees by region % of total FTE Region 2002 2012 2012 2012 Number % Auckland 6,187 6,393 20.4% 4,960 21 0.3% Otago 3,635 4,455 14.2% 3,456 82 2.1% Canterbury 4,753 3,889 12.4% 3,017-86 -2.0% Wellington 2,313 3,030 9.7% 2,351 72 2.7% Waikato 2,899 2,955 9.4% 2,292 6 0.2% Bay of Plenty 2,457 2,426 7.7% 1,882-3 -0.1% Tas-Nel-Marl 1,439 1,633 5.2% 1,266 19 1.3% Manawatu-Wanganui 1,501 1,477 4.7% 1,146-2 -0.2% Northland 1,292 1,281 4.1% 994-1 -0.1% Gis-Hawke's Bay 1,246 1,237 3.9% 959-1 -0.1% West Coast 906 932 3.0% 723 3 0.3% Southland 964 897 2.9% 696-7 -0.7% Taranaki 722 764 2.4% 592 4 0.6% New Zealand 30,314 31,368 100.0% 24,334 105 0.3% Number Change 2002-2012 pa

Sector profile: Accommodation 13 Economic contribution The accommodation sector contributed $1,190 million ($1.19 billion) to the New Zealand economy in 2012 (measured in 2010 prices 2 ). This level was down from a peak of $1,284 million in 2007, a decline of 7.3%. Over the ten year to 2012 gross domestic product (GDP) in the sector grew by 0.7% pa compared with 2.3% in the economy as a whole. The sector accounted for 0.6% of national GDP in 2012. Table 8. Contribution to GDP by the accommodation sector (2001-2013) Accommodation Year New Zealand $ million Change $ million Change 2001 1,082 152,045 2002 1,116 3.1% 159,473 4.9% 2003 1,162 4.1% 166,488 4.4% 2004 1,227 5.6% 173,781 4.4% 2005 1,242 1.3% 178,428 2.7% 2006 1,262 1.6% 182,439 2.2% 2007 1,291 2.3% 188,639 3.4% 2008 1,262-2.3% 187,362-0.7% 2009 1,209-4.2% 188,588 0.7% 2010 1,214 0.4% 192,015 1.8% 2011 1,211-0.2% 194,322 1.2% 2012 1,197-1.2% 199,966 2.9% 2002-2012 0.7% 2.3% Figure 4. Accommodation sector GDP ($m) 1,400 1,200 1,000 800 600 400 200 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2 In this profile, we present all GDP estimates in constant 2010 prices. GDP presented in constant prices is sometimes referred to as real GDP. By using constant prices we remove the distractionary effect of inflation. It enables us to meaningfully compare GDP from one year to the next. Our GDP estimates differ from those published by Statistics New Zealand which are at 1995/6 prices.

14 Sector profile: Accommodation sector Other indicators: guest nights The number of guest nights in commercial accommodation grew rapidly between 2000 and 2007. The number of guest nights increased from about 23.5 million to 32.5 million over the seven year period, an increase of 3.7% per annum. This rapid increase coincided with strong economic and personal income growth around the world and in New Zealand. However, following the onset of the Global Financial Crisis, international guest nights fell between 2008 and 2012 as fewer tourists from North America and Europe visited New Zealand. On the other hand, domestic guest nights remained resilient over the same period, as the recession in the New Zealand economy was not as severe as in other developed nations and some New Zealanders chose to holiday at home rather than head overseas. Indicators from 2013 suggest that guest nights have begun to recover strongly, with international guest nights rising in line with recovering visitor arrivals from the US, the UK, as well as ongoing growth in arrivals from Australia and China. Guest nights in 2013 rose to above their 2008 peak. We expect this rise in guest night to continue. Not only is the domestic economy strengthening, which will increase willingness to spend on leisure, but also economic conditions in the US and the UK are strengthening, which will push up arrivals from those countries. Arrivals from Continental Europe have also shown signs of improvement as economic conditions in Europe stabilise. Although changes to travel regulations in China have affected growth over recent months by regulating the cut-price tour industry, ultimately the new regulations will lead to increased numbers of Chinese travelling independently staying longer and seeing more of New Zealand. Figure 5. Number of guest nights, 2000-2013 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 Source: Statistics NZ The composition of tourists to New Zealand has changed considerably over the past five years. Visitors from places such as China and Australia have surged, while arrivals from traditionally important markets such as the UK (and other parts of Europe) and the US have fallen. Visitors from these major markets stay for vastly different periods of time on average and visit different parts of the country. The figure below shows that despite a decline in guest nights in New Zealand as a whole between 2008 and 2012, guest nights have increased strongly in Wellington (34%), Auckland (26%) and Otago (22%). The regions that have experienced the

Sector profile: Accommodation 15 largest declines are Canterbury (-7%) and Southland (-4%). The Canterbury earthquakes are a likely contributor to the decline in guest nights in that region. Figure 6. Change in guest nights, 2003-2013 Wellington Auckland Otago Taranaki, Manawatu, Wanganui Bay of Plenty Waikato Nelson, Marlborough, Tasman Hawke's Bay, Gisborne West Coast Canterbury Northland Southland -2% -3% -4% -5% 0% 2% 5% 8% 9% 26% 31% 33% -10% -5% 0% 5% 10% 15% 20% 25% 30% 35% Source: Statistics NZ Figure 7. Guest nights by region, 2013 Auckland Otago Canterbury Bay of Plenty Waikato Wellington Nelson, Marlborough, Tasman Taranaki, Manawatu, Wanganui Northland Hawke's Bay, Gisborne West Coast Southland 2912 2731 2668 1836 1656 1549 1172 1106 749 4089 4542 6427 0 1000 2000 3000 4000 5000 6000 7000 Source: Statistics NZ

16 Sector profile: Accommodation sector The change in composition of foreign tourists may also have impacted on the demand for different types of accommodation over the past 10 years. The growing number of Chinese package tourists contributed to increased demand for rooms in hotels. The decline in tourists from UK and other parts of Europe likely contributed to relatively flat demand for motor camp accommodation and motels in some areas. However, travel patterns for foreign tourists are changing; in particular increasing numbers of Chinese visitors are taking more self-directed travel. This means there is an opportunity for growth across all sectors, especially in high quality establishments within each sector. Figure 8. Guest nights by subsector, 2013 Hotels 11,422 Motels 10,609 Holiday parks 6,278 Backpackers 4,401 0 2,000 4,000 6,000 8,000 10,000 12,000 Source: Statistics NZ Figure 9. Change in guest nights by sector 2003-2013 Hotels 23% Backpackers 21% Holiday parks 5% Motels 4% 0% 5% 10% 15% 20% 25% Source: Statistics NZ

Sector profile: Accommodation 17 3. INDUSTRY OUTLOOK Outlook for the New Zealand economy Economic growth in New Zealand is forecast to average 4.2% per annum (pa) over the two years to March 2016, as activity is supported by strong export incomes, rising construction activity, and healthy domestic confidence. Chinese and Australian economic growth rates are moderating, but demand for our primary exports will remain strong as household spending continues to grow in China. New Zealand s strong economic performance over the next 2-3 years will be accompanied by: higher net migration climbing above 30,000pa by mid-2014 and remaining over 20,000pa as we head into 2015 good employment growth, driving the unemployment rate down to 5.0% by the end of 2015 accelerating wage growth, lifting to 3.5%pa by March 2016 rising interest rates, with the official cash rate reaching 5.00% by the beginning of 2016 the return of inflation over 2%pa, due to the strengthening domestic economy, costs associated with the Christchurch rebuild, and a gradual lift in import prices. Economic growth is forecast to peak at 4.4%pa in March 2015, with growth moderating over the following two years as the stimulus from high export incomes fades, rebuilding activity in Canterbury reaches its peak level, and growth in the housing market and domestic economy slow in response to the rise in interest rates that has taken place. Figure 10. New Zealand GDP growth forecast to 2017 (calendar years) 4.5% 4.0% 3.5% 3.0% 2.9% Forecast 2.7% 4.2% 4.0% 3.6% 2.5% 2.0% 1.8% 1.9% 1.5% 1.0% 1.2% 0.5% 0.0% 2010 2011 2012 2013 2014 2015 2016 2017

18 Sector profile: Accommodation sector Outlook for the accommodation sector Sector outlook Employment in the sector is expected to recover over the five years to 2017 as both domestic and international tourism grow in New Zealand. We forecast total employment in the sector to increase to about 34,500 from 31,400 in 2012. Growth in employment is initially likely to be concentrated in locations frequented by international visitors on shorter trips, such as Auckland, Rotorua, and Queenstown. Accommodation sector employment in Christchurch will also climb rapidly as more accommodation capacity is rebuilt. Rising levels of domestic tourism will initially support modest employment growth in the sector in other parts of New Zealand, but more rapid growth in regional accommodation employment levels will not occur until there are sustained signs of a recovery to international visitor number on longer trips. With international visitor arrivals from the US and parts of Europe showing signs of growth over recent quarters amid stabilising economic activity, we are optimistic that the initial stages of this recovery are underway. Table 9. Total employment in the accommodation sector, 2012-2017 Year Accommodation Level Change pa 2012 31,368-2.5% 2013 31,771 1.3% 2014 32,447 2.1% 2015 33,053 1.9% 2016 33,983 2.8% 2017 34,515 1.6% 2012-2017 1.9% Figure11. Total employment in the accommodation sector, 2001-2017 40,000 35,000 Forecast Forecast 30,000 25,000 20,000 15,000 10,000 5,000 0

Sector profile: Accommodation 19 Occupation outlook The tables below show forecast of employment by broad occupation and the 20 numerically largest detailed occupations in the accommodation sector. In addition to new positions being created, positions will need filling due to replacement of existing staff as staff enter and leave occupations. The table below shows new jobs opening due to growth in employment, net positions opening due to replacement and total positions opening. Net replacement demand is a method for estimating job openings by occupation arising from individuals leaving an occupation net of jobs taken by individuals reentering the occupation. By netting out individuals re-entering an occupation, net replacement rates measures are a subset of more commonly cited labour turnover rates. Net replacement demand is the relevant measure for providing advice on education and training needs. Details about the method used to measure future net replacement demand are provided in the appendix. Table 10. Forecast of employment by broad occupation, 2012-2017 Occupation Managers 10,453 11,695 248 2.3% 423 672 Professionals 2,032 2,184 31 1.5% 64 95 Technicians & Trades Workers 2,353 2,494 28 1.2% 18 46 Community & Personal Service Workers 5,184 5,498 63 1.2% 242 304 Clerical & Administrative Workers 2,770 2,996 45 1.6% 77 123 Sales Workers 589 696 21 3.4% 25 46 Machinery Operators & Drivers 129 149 4 3.0% 4 8 Labourers 7,858 8,802 189 2.3% 241 429 Total 31,368 34,515 629 1.9% 1,094 1,724 Employment Change 2012-2017 pa Replacement 2012 2017 New jobs % pa Total positions

20 Sector profile: Accommodation sector Table 11. Forecast of employment for top 20 occupations. Occupation Employment Change 2012-2017 pa Net replacement 2012 2017 Jobs % pa Total net positions opening pa Hotel or Motel Manager 4,786 6,006 244 4.6% 289 533 Commercial Cleaner 4,165 4,486 64 1.5% 91 155 Hotel Service Manager 2,106 2,267 32 1.5% 71 103 Waiter 2,054 1,250-161 -9.5% 95-66 Commercial Housekeeper 1,764 2,373 122 6.1% 71 193 Chef 1,588 1,425-33 -2.1% 1-31 Accommodation and Hospitality Managers ne 1,100 1,443 69 5.6% 30 99 Receptionist (General) 944 1,585 128 10.9% 44 172 Hotel or Motel Receptionist 856 379-95 -15.0% 19-76 Kitchenhand 814 571-49 -6.8% 60 11 Caravan Park and Camping Ground Manager 696 785 18 2.4% 16 34 Bar Attendant 692 326-73 -14.0% 29-44 Doorperson or Luggage Porter 563 361-40 -8.5% 11-29 Bed and Breakfast Operator 503 699 39 6.8% 15 54 Cook 330 215-23 -8.3% 5-18 Corporate General Manager 281 481 40 11.4% 10 50 Café or Restaurant Manager 274 368 19 6.1% 23 42 General Clerk 263 212-10 -4.2% 4-6 Laundry Worker (General) 255 171-17 -7.7% 3-14 Chief Executive or Managing Director 230 338 22 8.0% 7 28 The occupations with the largest number of positions opening over the five years to 2017 are hotel or motel manager (533 per year), commercial housekeeper (193 per year) and receptionists (172 per year).

Sector profile: Accommodation 21 4. OPPORTUNITIES AND CHALLENGES Issues identified by the sector Changing customer mix Customers in the accommodation sector are increasingly diverse reflecting both an increase in tourists from non-traditional markets, particularly from Asia and NZ s changing population. This will impact on the types of accommodation people use and also the services they demand. As outlined in further detail below, the changing customer mix will also impact on how long people stay and the parts of New Zealand they visit. Technology Changing technology and innovation will continue to have a major impact on the sector in the medium term both in terms of the technology that businesses have access to and how customers engage with the service sector. Advances in technology have given businesses better access to their customers and enabled the sector to better meet the needs of a range of customers. However, rapidly advancing technology also demands staff with skills to use technology and adaptability to be able to respond to changes. To thrive, the sector needs to continue to learn, adapt and profit from new and changing technology. Customer service Customer expectations are continuously evolving. Today s customers are demanding better service, lower prices, increased use of technology, and personalised products and services. Meeting these expectations is an important part of ensuring an outstanding visitor experience. The sector needs to ensure it does its part in driving value and delivering this outstanding experience by striving for superior customer service. Issues identified by Infometrics Overview of outlook and background The accommodation sector stands to benefit over the coming decade both from further increases to domestic tourism spending, as well as recovering guest nights by international visitors. However, given the evolving nature of travel patterns, particularly as a result of the changing composition of overseas visitors, challenges lie ahead for accommodation providers in certain parts of the country. The composition of where tourists are coming from has changed significantly over the past decade. Visitors from places such as China and Australia have surged, while arrivals from traditionally important markets such as the UK (and other parts of Europe) and the US have fallen. Visitors from these major markets stay for vastly different periods of time on average and visit different parts of the country. The median length of stay for Australians (7 days) and Chinese (4 days) is far less than for visitors from the UK (20 days) and the US (9 days). The increasing prevalence of these shorter-staying visitors has left the typical foreign tourist to New Zealand with less time to stay in more remote parts of the country. As a result, demand for accommodation by foreign tourists has become more concentrated on certain regions, like Auckland and Queenstown.

22 Sector profile: Accommodation sector International guest nights to slowly recover When looking to the future of their industry, those exposed to the tourism industry need to bear in mind that the decline in arrivals from longer-staying nations is due to a prolonged trough in developed nations economic cycles, while the lift in arrivals from Australia and China is more of a permanent structural shift. The risks and opportunities posed by these two factors for the accommodation sector throughout New Zealand are quite distinct and planning must take account of these differences. Visitor numbers from longer-staying nations will eventually recover even if this recovery takes a number of years. At least in the meantime, those accommodation establishments who have weathered the storm to date are leaner and more efficient than they were before the downturn and will be well poised to capture any pick-up. Domestic guest nights to continue rising At the same time, stakeholders in the sector must not ignore the important role which domestic visitors play in nurturing tourism in regional New Zealand. With recent economic indicators continuing to point towards a broad-based pick up in the New Zealand economy, kiwis willingness to spend on discretionary items such as travel will grow significantly over the coming years. Although some of this additional travel will be to overseas destinations, accommodation providers throughout New Zealand still stand well poised to capture some of this uplift. Businesses will also become more willing to spend on staff travel for events such as client visits and conferences over the coming years.

Sector profile: Accommodation 23 5. DEMOGRAPHICS This chapter describes the demographic characteristics of employees in the accommodation sector. It draws heavily on the 2006 and 2013 population census. Age The sector has a higher proportion of both younger (15-24 years) and older (55 years +) workers than the national economy. The number of relatively low-skilled, part time jobs in the sector is attractive to young workers who are able to fit their jobs around study. On the other hand, certain jobs in the accommodation sector, such as bed and breakfast operator, are attractive to older people. Table 12. Employment by 5-year age group in the accommodation sector Age Group Employment % of Total NZ % of Total 2006 2013 2006 2013 2013 15-19 2,981 1,871 8.7% 6.0% 4.8% 20-24 4,579 3,790 13.4% 12.1% 9.1% 25-29 3,322 3,144 9.7% 10.0% 9.1% 30-34 3,085 2,662 9.0% 8.5% 9.2% 35-39 3,101 2,438 9.1% 7.8% 9.9% 40-44 3,291 2,842 9.6% 9.0% 11.7% 45-49 3,471 3,076 10.1% 9.8% 11.8% 50-54 3,488 3,208 10.2% 10.2% 11.6% 55-59 3,387 3,225 9.9% 10.3% 9.5% 60-64 2,102 2,752 6.1% 8.8% 7.4% 65+ 1,415 2,403 4.1% 7.7% 5.9% Total 34,222 31,412 100.0% 100.0% 100.0% Figure 12. Proportion of total employment by 5-year age group, 14.0% 12.0% Accommodation New Zealand 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65+ The number of young employees aged between 15 and 24 declined substantially between 2006 and 2013, which indicates that the sector took in fewer young

24 Sector profile: Accommodation sector recruits during the harder economic years between the censuses. On the other hand, the number of older workers increased suggesting that older workers held onto their jobs longer and took later retirement. Figure 13. Employment by 5-year age group in the accommodation sector 5,000 4,500 4,000 2006 2013 3,500 3,000 2,500 2,000 1,500 1,000 500 0 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65+ Gender There were more female than male workers in the accommodation sector in 2013. Females accounted for 62.7% of total employment. The share of female workers decreased from 64.7% to 62.7% between March 2006 and March 2013. This may be related to the different experience between females and males during the recession following the Global Financial Crisis. Males were more adversely affected in the wider economy due to job losses in industries in which males are concentrated such as construction and manufacturing. The relative increase in availability of males may have increased the relative number of males to females applying for jobs in the sector. Table 13. Employment by gender in the accommodation sector Gender Employment % of Total NZ% of Total 2006 2013 2006 2013 2013 Female 22,149 19,689 64.7% 62.7% 47.1% Male 12,073 11,723 35.3% 37.3% 52.9% Total 34,222 31,412 100.0% 100.0% 100.0%

Sector profile: Accommodation 25 Figure 14. Proportion of total employment by gender, 2013 70.0% 60.0% Accommodation New Zealand 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Female Male Figure 15. Employment by gender, 2006 and 2013 25,000 20,000 2006 2013 15,000 10,000 5,000 0 Female Male

26 Sector profile: Accommodation sector Highest qualification Just over half (50.1%) of employees in the accommodation sector had no post school qualifications in 2013. This was a significantly higher proportion than in the national economy (43.4%). Average training levels increased between 2006 and 2013 with the number of workers without a qualification falling from 57.2% to 50.1%. At the other end of the spectrum the number of workers with a degree or higher increased from 13.8% to 17.3% over the seven year period. Table 14. Employment by highest qualification in the accommodation sector Highest qualification Employment % of Total NZ% of Total 2006 2013 2006 2013 2013 No Post-school Qualification 19,579 15,731 57.2% 50.1% 43.4% Level 1, 2 or 3 Certificate 2,360 1,466 6.9% 4.7% 3.5% Level 4 Certificate 2,979 2,584 8.7% 8.2% 11.2% Level 5 and 6 diploma 3,242 3,228 9.5% 10.3% 10.0% Degrees, level 7 quals and higher 4,740 5,445 13.8% 17.3% 23.9% Not Elsewhere Included 1,322 2,957 3.9% 9.4% 7.9% Total 34,222 31,412 100.0% 100.0% 100.0% Figure 16. Employment by highest qualification, 2013 60.0% 50.0% Accommodation New Zealand 40.0% 30.0% 20.0% 10.0% 0.0% No Qual Level 1-3 Level 4 Level 5&6 Degree & higher NE

Sector profile: Accommodation 27 Figure 17. Employment by highest qualification in the accommodation sector 25,000 20,000 2006 2013 15,000 10,000 5,000 0 No Qual Level 1-3 Level 4 Level 5&6 Degree & higher NE

28 Sector profile: Accommodation sector Ethnicity The majority (71.9%) of employees in the accommodation sector in 2013 were of European ethnicity. This was up from 68.0% in 2006. The second largest ethnic group was Asian, who accounted for 15.6% of employment in 2013, up from 11.3% in 2006. Māori accounted for 11.2% of employees in 2013, down from 12.1% in 2006 while Pasifika accounted for 4.9%, up from 4.6% in 2006. The decrease in employment of workers in the Other category would have been influenced by the substantial decrease in the number of individuals who identified themselves as New Zealanders in the 2013 census compared with the 2006 census. Table 15. Employment by ethnicity, 2006 and 2013 Ethnic Employment % of Total NZ% of Total 2006 2013 2006 2013 2013 European 23,286 22,601 68.0% 71.9% 77.0% Māori 4,126 3,503 12.1% 11.2% 11.2% Pacific 1,584 1,526 4.6% 4.9% 5.0% Asian 3,860 4,885 11.3% 15.6% 11.1% Other 4,492 1,224 13.1% 3.9% 3.4% Total 34,222 31,412 109.1% 107.4% 107.6% Figure 18. Employment by ethnicity, accommodation sector and New Zealand, 2013 90.0% 80.0% 70.0% Accommodation New Zealand 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% European Māori Pacific Asian Other

Sector profile: Accommodation 29 Figure 19. Employment by ethnicity, 2006 and 2013 25,000 20,000 2006 2013 15,000 10,000 5,000 0 European Māori Pacific Asian Other

30 Sector profile: Accommodation sector Country of birth In 2013, New Zealand-born workers represented 64.1% of the workforce in the accommodation sector. This is 6.0% less than in 2006. The share of workers born in Asia increased by 3.4% to 13.2% over the same period while the share of workers born in Europe increased by 0.8% to 11.0%. The accommodation sector employed relatively less New Zealand born workers compared to all industries in 2013. These workers comprised 71.7% of all workers in all industries while they represented 64.1% in the sector. There are relatively more workers born in Asia working in the sector than in all industries. Table 16. Employment by country of birth, 2006 and 2013 Country of Birth Employment % of Total NZ% of Total 2006 2013 2006 2013 2013 New Zealand 23,982 20,133 70.1% 64.1% 71.7% Australia 784 574 2.3% 1.8% 1.6% Oceania 1,166 1,335 3.4% 4.3% 3.8% Asia 3,347 4,144 9.8% 13.2% 8.6% Europe 3,491 3,452 10.2% 11.0% 9.4% North Africa & Middle East 94 89 0.3% 0.3% 0.4% Sub Saharan Africa 448 550 1.3% 1.8% 2.3% Americas 593 790 1.7% 2.5% 1.3% Other 319 345 0.9% 1.1% 0.9% Total 34,222 31,412 100.0% 100.0% 100.0% Figure 20. Employment by country of birth, accommodation sector and New Zealand, 2013 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Accommodation New Zealand

Sector profile: Accommodation 31 Figure 21. Employment by country of birth in the accommodation sector, 2006 and 2013 30,000 25,000 20,000 2006 2013 15,000 10,000 5,000 0

32 Sector profile: Accommodation sector Hours worked Those working 40-49 hours per week account for the highest share (28.6%) of employees in the accommodation sector in 2013. This share has increased since 2006 by 0.7%. Workers doing less than 30 hours represent 33.5% of the sector which rose from 32.1% in 2006. The share of very high hours worked (50 and more) decreased from 22.1% in 2006 to 20.1% in 2013. Table 17. Employment by hours worked, 2006 and 2013 Hours Worked Employment % of Total NZ% of Total 2006 2013 2006 2013 2013 1-9 2,374 2,165 6.9% 6.9% 5.0% 10-19 4,241 3,942 12.4% 12.5% 7.0% 20-29 4,384 4,405 12.8% 14.0% 9.1% 30-39 4,272 4,559 12.5% 14.5% 13.8% 40-49 9,572 8,996 28.0% 28.6% 43.0% 50-59 2,613 2,268 7.6% 7.2% 11.1% 60 + 4,963 4,049 14.5% 12.9% 8.2% Not specified 1,803 1,029 5.3% 3.3% 2.8% Total 34,222 31,412 100.0% 100.0% 100.0% Compared to all industries, the accommodation sector in 2013 employs more parttime (less than 30 hours) workers. In all industries the share is 21.1% compared to 33.5%. The share of very high hours worked (more than 50) is 20.1% which is 0.8% higher in the accommodation sector compared to all industries. This is probably due to the nature of many managerial roles in the accommodation sector which requires around-the-clock availability. Figure22. Employment by number of hours worked, accommodation sector and New Zealand, 2013 50.0% 45.0% 40.0% Accommodation New Zealand 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 1-9 10-19 20-29 30-39 40-49 50-59 60 + Not specified

Sector profile: Accommodation 33 Figure 23. Employment by number of hours worked per week, 2006 and 2013 12,000 10,000 2006 2013 8,000 6,000 4,000 2,000 0 1-9 10-19 20-29 30-39 40-49 50-59 60 + Not specified

34 Sector profile: Accommodation sector 6. TRAINING This chapter describes the characteristics of individuals being trained by ServiceIQ in 2013. The data includes all individuals who were registered at some point during 2013. The last section in the chapter describes enrolments and completions in provider-based qualifications of relevance to the accommodation sector. Accommodation sector trainees accounted for 4.4% of total ServiceIQ trainees. Age Table 18. Number of trainees by 5-year age group Age group Number of trainees % of total Employment Accommodation ServiceIQ Accommodation ServiceIQ Accommodation 15-19 61 3,091 6.9% 14.3% 6.0% 20-24 304 6,997 34.5% 32.4% 12.1% 25-29 167 3,827 18.9% 17.7% 10.0% 30-34 107 2,084 12.1% 9.7% 8.5% 35-39 83 1,425 9.4% 6.6% 7.8% 40-44 62 1,214 7.0% 5.6% 9.0% 45-49 38 993 4.3% 4.6% 9.8% 50-54 29 873 3.3% 4.0% 10.2% 55-59 23 606 2.6% 2.8% 10.3% 60+ 8 479 0.9% 2.2% 16.4% Total 882 21,589 100.0% 100.0% 100.0% Source: ServiceIQ With an average age of 30 years, trainees in the sector are on average older than in the ServiceIQ sector as a whole. The average age of all trainees in the ServiceIQ sector is 27. Approximately 58.6% of accommodation trainees are 25 years and over, compared with 53.3% in the ServiceIQ sector as a whole. There are significant differences between the age profile of accommodation sector trainees and the persons employed in the sector. While 60% of trainees are under 30-years of age only 28% of employees in the sector are under 30.

Sector profile: Accommodation 35 Figure 24. Proportion of trainees by 5-year age group 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60+ 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% Accommodation ServiceIQ Source: ServiceIQ

36 Sector profile: Accommodation sector Gender Males account for a higher proportion of trainees in the sector than females. Approximately 61.5% of accommodation sector trainees are male, compared with 53.5% in the ServiceIQ sector as a whole. The gender profile of trainees in the accommodation sector is quite different to the employment profile, with females accounting for the majority of employees (63%). Table 19. Number of trainees by gender Gender Number of trainees % of total Employment Clubs ServiceIQ Clubs ServiceIQ Clubs Female 542 11,560 61.5% 53.5% 60.3% Male 331 9,984 37.5% 46.2% 39.7% Unknown 9 45 1.0% 0.2% Total 882 21,589 100% 100% 100% Figure 25. Proportion of trainees by gender Female Male Unknown 0% 10% 20% 30% 40% 50% 60% 70% Clubs ServiceIQ