Giants Gate Falls, Milford Track

Image: Graham Dainty | ©

Introduction

Why DOC undertook the trial and the key findings from the evaluation of the trial over the summer seasons of 2018/19 and 2019/20.

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For the 2018/19 and 2019/20 Great Walks summer seasons DOC trialled the introduction of differential pricing for international visitors staying in huts and campsites on four of its most popular Great Walks.

By trialling differential pricing, DOC sought to obtain valuable information on the effectiveness of pricing as a tool to manage visitor pressure. It also supported our work to set and maintain a fair pricing system for New Zealanders and international visitors, recover costs and ensure the fees reflect the true value of these world-class walks.

The price for international visitors for hut and campsite fees was set at a level approximately double the New Zealand resident price for the Milford, Routeburn, Kepler and Abel Tasman Coast tracks. There was no change to pricing on the other Great Walks.

Fees for international children 0–17 years were applied and set to the same level as international adults on the four Great Walks. New Zealand children stayed free of charge.


Trial objectives

The trial had three major objectives:

1. Improved access to the Great Walks for people ordinarily resident in New Zealand

New Zealand is highly regarded as a walking destination by both international visitors and New Zealanders. The Great Walks are premium multi-day walking experiences that showcase the best of New Zealand’s landscapes and natural and cultural values. Over the last few years, the accommodation on some Great Walks has become increasingly difficult to book at peak times due to their popularity.

Visitor satisfaction has remained high despite the rise in numbers on our Great Walks. A key challenge is to maintain the quality of experience at high use sites, while also ensuring that international visitor growth still allows New Zealanders' to enjoy and engage with these places.

2. Increase the proportion of costs that are received from international users

User fees are an important contribution to ensure DOC can continue to provide quality facilities on the Great Walks. DOC’s costs to maintain the Great Walks has in previous seasons exceeded the revenue from hut fees by up to $3.8 million in one year.

Pricing also needs to fairly apportion the cost of maintaining the Great Walk experiences between New Zealanders and international visitors, considering their total contributions (including user fees and tax contributions).

DOC expected to recover additional costs during the trial periods, without significantly reducing bookings and visitor demand and that the increased accommodation fees would encourage overseas visitors to use less visited Great Walks where prices were unchanged.

3. Charge international visitors a fee that more fairly reflects the high value of the experience

New Zealand's Great Walks are internationally renowned top visitor experiences and the prices need to reflect the exceptional value they offer all visitors.

The Great Walks are well-formed and have a higher standard of huts and facilities than our other tracks, enabling them to sustain a high level of use while protecting the surrounding environment. This high standard, as well as the challenging locations of Great Walks huts and tracks, make the walks expensive to build and maintain.


Outcomes of the differential pricing trial

The trial ran over the summer Great Walks seasons for 2018/19 and 2019/20. It was rerun for the second season to enable DOC to test some of the issues, limitations and potential impacts that the 2018/19 evaluation found.

Evaluation for 2019/20

Key findings of the evaluation report

The evaluation of the trial 2019/20 concluded that two of the three trial objectives were achieved:

  1. Access for New Zealand residents – More New Zealanders (18%) experienced the Great Walks in 2020 than at the same time in 2018.
  2. Increased international contribution to costs
    • The proportion of revenue contributing towards costs increased from 65% to 66%.
    • The individual’s contribution was twice that of individual New Zealanders.
    • The direct monetary contribution towards costs increased from 30 to 38% (40 to 56% for the trialled walks).

The third objective, that the fee equated to the value of the experience, has not been achieved. There were two main indications this was not achieved:

  • The proportion of international visitors on the trialled walks who stated those walks were value for money decreased from 73% in 2018 to at least 63% under the trial.
  • Most of the international visitors considered the differential pricing fees were too high.

More detailed findings are in the evaluation report 

DOC commissioned an independent evaluation of the 2019/20 trial. The findings are set out in the Great Walks differential pricing trial evaluation 2019/20 report (PDF, 11,340K).

The evaluation report covers the period from October 2019 to the end of January 2020. It provides information about whether the objectives of the trial were achieved and any potential impacts on the tourism sector, visitor behaviour and the Department’s operations.

The evaluation covered only part of the 2019/20 season for logistical reasons around future planning, decision making about differential pricing and opening for bookings in June 2020. Consequently, the evaluation of the trial was largely unaffected by the storm events in February 2020 that damaged the Routeburn and Milford tracks and the COVID-19 pandemic that stopped international domestic tourism for the remainder of the season.

For snapshot of the results over the 2019/20 from October to January see the Great Walks summer season factsheet (PDF, 1,380K).

Evaluation for 2018/19

Key findings of the evaluation report

The evaluation of the trial 2018/19 concluded that two of the three trial objectives were achieved:

  1. Access for New Zealand residents – More New Zealanders (17%) experienced the Great Walks in 2019 than at the same time in 2018.
  2. Increased international contribution to costs – The proportion of revenue contributing towards costs received from international visitors increased from 65% to 68%.

The third objective, the fee equated to the value of the experience, has not been achieved. There were two main indications this was not achieved:

  • The proportion of international visitors on the trialled walks who stated those walks were value for money decreased from 73% in 2018 to at least 63% under the trial.
  • Most of the internationals visitors considered the differential pricing fees were too high.

More detailed findings are in the evaluation reports

DOC commissioned an independent evaluation of the 2018/19 trial. The findings are set out in the: Great Walks differential pricing trial evaluation 2018/19 report (PDF, 10,182K).

The evaluation report covers the period from October 2018 to the end of January 2019 and provides information about whether the objectives of the trial were achieved and any potential impacts on the tourism sector, visitor behaviour and DOC operations.

The evaluation covered only part of the 2018/19 season for logistical reasons around future planning, decision making about differential pricing and opening for bookings in June 2019.

For results over the whole 2018/19 season see the Differential pricing trial 2018/19 Great Walks summer season factsheet (PDF, 1,497K). The results for the whole season differ slightly to those of the report period. These differences are  due to the difference in the time coverage of the data used.

A second evaluation report was prepared, to cover a full season of data (the first report referred to above covered part of the season). The full season report confirmed the findings of the first report (referred to below).

However, due to some track closures in March (weather induced), forecast revenue was down, and therefore the achievement of Objective 2 was less pronounced. The findings are set out in full in the Great Walks differential pricing trial 2018/19 evaluation full season report (PDF, 13,309K).

Caution around the results

DOC is cautious in attributing the trial results solely to differential pricing. The trial results are qualified and should be placed in context, given there are data and trial limitations and a significant range of variables that affected the conclusions.


Beyond the trial

The implementation of differential pricing is currently deferred due to the impacts of the COVID-19 pandemic.

DOC’s analysis of the results of the trial over the summer Great Walks seasons for 2018/19 and 2019/20 found that differential pricing can be used (both on the Great Walks and other DOC facilities) to achieve all three of the above objectives with some changes to how the prices are set and the tracks and facilities that it will apply on.

DOC will now assess where differential pricing might be used across all its facilities in future years to manage visitor numbers, access and cost recovery appropriately.

When and where differential pricing is implemented on the Great Walks it is likely to include the following two adjustments from the trial:

The differential rate is to be reduced

The feedback from international visitors in both years of the trial was that they considered the 2x differential for the Great Walks too great and that it was not value for money. DOC did further research and analysis into potential rates. This work involved both quantitative analysis and willingness pay surveys.

The quantitative analysis for refining the differential was based on a ‘full cost’ and a relative contributions approach. The difference between New Zealanders’ and international visitors’ contributions over and above the hut fee (i.e. through taxation) determined the differential. The results indicated that a more equitable differential was in the order of 1.5x. This differential was supported by the results of the willingness to pay survey.

A new international youth rate

International visitors indicated that it was unfair that children should pay the full international adult rate. DOC agreed with this feedback and an international youth rate of half the international adult rate is to be applied to the Great Walks.

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