The challenge of a travel bubble

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Talk of a transtasman travel bubble is ramping up. Reports and interviews are saying it could happen by the end of the year.

It would answer the prayers of some of the region’s businesses and workers.

But what is it worth?

There will be costs. Let’s start there before we think too much about the potential gains.

The biggest concern is health impacts.

The experience in Victoria, or even New Zealand’s latest and largest cluster, shows how quickly an outbreak can happen.

Outbreaks cause short-term and long-term illness, hospitalisations and even death.

They have to be considered in any decision.

Stopping a new outbreak also has economic costs.

Treasury estimated that Level 2 costs the country nearly half a billion dollars per week, compared to Level 1.

So, agreed, there are large potential costs if things go wrong.

What is the benefit of more tourism?

More than half of tourism is actually domestic travel.

Nearly 60% of it is New Zealanders travelling around their own country. Most of that is leisure travel, not business.

New Zealanders also spend a lot on overseas travel.

I’ve seen a few different figures, but it is roughly 30% of spending on domestic tourism.

Getting New Zealanders travelling again, and maybe spending their overseas budgets here, could get the tourism sector up to three-quarters of its former size.

That’s without the transtasman travel bubble.

What about the last quarter? Australia could definitely help with that.

Australia is our largest source of tourism, in people and in dollars.

They make up about 40% of overseas arrivals.

Getting Australian tourists back in New Zealand would help plug the remaining gap.

Of course, more New Zealanders would also head the other way. It’s hard to predict exactly what the net effect would be.

Let’s say that a transtasman bubble brought back 20% of our tourism sector.

That is worth about $3billion to the country’s GDP. Queenstown could expect about 15% of that, or half a billion dollars.

That number takes us back to the beginning.

Expanding the bubble could be really helpful for Queenstown.

But if the country had to go from Level 1 to Level 2 as a result, just for one week, that entire gain would be lost. That’s the challenge facing the Government.

It all hinges on how well the two countries can contain the virus.