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NZ tourism company Skyline 'back to 80%' after Covid-19 closed the world

Business / news
NZ tourism company Skyline 'back to 80%' after Covid-19 closed the world
People ride on carts downhill, New Zealand luge company Skyline in Queenstown.
Skyline would like to see more people going down, to bring its visitor numbers up. (Image: Skyline Enterprises)

International luge boss Geoff McDonald reckons the firm is back to about 80% of its pre-Covid activity.

Skyline Enterprises has tourism operations in New Zealand, South Korea, Singapore and Canada, and has embryonic plans for a luge in Swansea, Wales.

The business suffered through the pandemic. Borders were closed, and people stayed home either by choice or by force. 

Tourism operators like Skyline, which runs the popular Queenstown Gondola and Rotorua luge, saw customers dwindle down to almost nothing.

For the first time, McDonald sees green shoots in international visitor numbers, with travellers from the all-important Chinese market now able to travel again.

Its Korean operations in Tongyeong and Busan have seen a trickle of Chinese tourists, McDonald says, but only in the past few weeks. Its New Zealand operations are only “just now” seeing arrivals from mainland China.

China had kept its people at home under a severe zero-Covid-19 lockdown regime. China only reopened its borders fully in March, allowing international tourists to visit.

McDonald says it has been a hard road for its South Korean operations in particular. Construction on its Busan luge started before Covid-19 turned tourism upside down, and opened “in the grips of Covid-19” in 2021.

“To be frank, it's been a little bit slow. It's been a little bit of a struggle, which we sort of did expect, in many ways, but there have been two key challenges for us in Korea.”

Conservative and cautious

Koreans have been conservative and cautious about Covid-19, and “Covid behavior has just dragged on and on”.

McDonald says even in late January and February people were masking indoors in South Korea.

“We found that even after the government changed mask-wearing restrictions, there was still a huge proportion of people wearing them outside, and in shopping malls, up until very recently.”

He says the business was quite concerned, but a trickle of Chinese tourists is encouraging.

The other big issue McDonald says has hampered the Korean business has nothing to do with Covid. It’s copycat sites. The Skyline CEO says there are at least 10 copycat luge sites currently operating in South Korea, with some of them promoted and supported by the local government.

Some of those sites are seasonal, such as being attached to ski fields, and may struggle to survive. Others have tried to leverage off Skyline’s success, right down to ripping off its logo “which we had to jump on”, McDonald says.

“There’s a lot of competition in Korea. If you get onto something that's popular there, very quickly others will follow your path. Long term, we still feel very confident about Korea, and we originated the luge. We believe that we know the best way to co-operate, operate it, and run it. We invest a lot in our sites in terms of yet keeping them world class, keeping the standards up and keeping the grounds looking great. We've got well trained people running them, and so long term, we feel very positive about Korea. We think some of that competition will drop away, because the sites are in the wrong place, or they don’t have the right operational model.”

For the year ended September 2022, New Zealand trade with Korea hit $7.18 billion, a 50% increase on the previous year, a recent report from the Ministry of Foreign Affairs and Trade (MFAT) found.

MFAT says NZ companies continue to do well in the Korean market.

"To continue their recent success, New Zealand exporters need to continue investing in marketing and brand strengthening, consolidating their in-country partnerships (preferably through in-person visits) and finding ways to add value to their products."

NZ signed a free trade agreement with South Korea in 2015. MFAT says despite a gloomy Korean economic outlook, New Zealand businesses are finding opportunities for growth and innovation there, with bilateral trade is at an all-time high, tourism and education are recovering and dairy has become NZ's number one export. 

Singapore has been going well, McDonald says, and Canada’s Skyline sites have been performing really well, because they have large domestic populations to tap into.

In May 2020 it was reported that Skyline had made more than half of its workforce redundant, as it battled to survive what turned into two years of low international tourism numbers and New Zealand’s own lockdowns restricted domestic travel and spending.

Now, McDonald says the firm has about 850 staff, with about 500 employees in New Zealand.

As soon as New Zealand’s borders opened in August 2022, Skyline benefited.

“In Queenstown about 40% of our visitors are Australian because of their direct flights. They had a lot of pent up desire, and they love our country, so it's been great.”

Staff challenges

McDonald says the international rebound has been really good, and the company had good domestic support from locals too.

The biggest challenge Skyline has in New Zealand is securing staff, McDonald says.

It has just shut its Queenstown operations to upgrade the gondola, which means a welcome break for workers. It had also been opening the restaurant for fewer nights due to the staffing issues it has faced, he says.

McDonald says the Government seems to have been listening. It had tweaked the rules for working holiday visas, and relaxed wage rules for workers in some sectors including in aged care, construction, infrastructure, meat processing, seafood and adventure tourism.

He says it will take a few lessons from the past few years. Because of Skyline's straitened financial position and smaller workforce, it couldn't keep up some activities. So it stopped, and then, McDonald says - not much happened.

On the horizon is a juicy new project: Skyline luge Swansea.

In March, the Welsh government committed to spending £4 million to entice Skyline to set up in Swansea.

Welsh Deputy Minister for Arts and Sport, Dawn Bowden, said at the time the project was significant in the further development of Swansea as a vibrant city destination, and it complemented other regeneration projects in the area, as well as supporting economic growth and all year-round jobs.

"The local council, local government and the national government, the Welsh Government through the tourism bureau, have been incredibly supportive," McDonald says.

"They're just very keen to activate that part of Southern Wales. The north, given the national parks and so forth gets a lot of attention, and a lot of people flow out that way, but it tends to stop at Cardiff. Swansea is something that they hope can really invigorate the economy."

Skyline's £34 million project includes a cable car and chair lift system, a Skyline luge, a sky swing, existing and new walking trails, a zipline, more access for mountain bike and food and beverage outlets. 

The project is expected to create up to 100 full-time equivalent jobs.

"You've got a very, very motivated local council," McDonald says.

"I think against quite a bit of cynicism, they've actually managed to get a number of projects going in that city and start to turn it around and move things forward. And we've been observing that ... Now we think the timing is right for something like this. It will bring jobs to the area, and it will be something they can call their own. We're very keen to get a Skyline operation into Europe. At the moment looks like it's going to be the first one."

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