Agri-Tourism

Rotorua Tourism

The tourism industry in and around Rotorua provides a supportive environment for the establishment of farm-stays and farm tourism. One of Rotorua’s biggest attractions is the Agrodome providing shows and farm tours, although this may be more than most farmers are willing to take on.

Tourism has experienced significant growth in the Rotorua tourism region over the last nine years.  Annual tourism expenditure to March 2018 was $823 million [1] having grown by two-thirds since March 2009.  This growth was driven by an increase of 81% in international tourism expenditure, while domestic tourism expenditure grew by 57%.

To get an idea of how this might translate to likely demand for farm-stay accommodation, it is useful to analyse the demand for commercial accommodation and private accommodation in the Rotorua region.

Commercial Accommodation

Expenditure on commercial accommodation [2] to year ending March 2018 was approximately $125 million split 42% domestic tourists and 58% international tourists.

Monthly trends (see Figure 1) show that total commercial accommodation expenditure peaks in January and is lowest in May and August. Expenditure varies from lows of $6 million per month (May and August) to highs reaching $14 - $16 million per month during peak season in the last few years.

It is clear from the monthly trends that demand for accommodation fluctuates much less with domestic tourism than with international tourism, which has larger swings, indicating that the domestic tourism market may provide more consistent revenue.

Occupancy rates for commercial acoommodation for the year ending 31 March 2018 [3] are outlined in Table 1.

COMMERCIAL ACCOMMODATION OCCUPANCY RATES

It is important to note that commercial accommodation does not take into account the growing hosted accommodation market, i.e. B&Bs and holiday accommodation. Information from a report on Airbnb accommodation conducted in September 2017 is outlined following the Private Household Visitor Monitor.

Private Households

In addition to the commercial accommodation monitor, the Private Household Visitor Monitor [4] measures the number of visitors staying in private households in Rotorua on a monthly basis.

According to this monitor, in the year ending March 2018, Rotorua households welcomed 424,577 guests in private households who stayed for a total of 1,601,550 guest nights for an average of 3.8 nights.

This extended length of stay shows those who stay in private accommodation are likely to stay longer than those in commercial accommodation. Tourists staying in private households for year ending March 2018 were predominantly from NZ, ie. 70%, with the remaining 30% being international tourists.

PRIVATE HOUSEHOLD VISITOR MONITOR

Airbnb

Airbnb is a new category of private accommodation that has been experiencing growth around New Zealand in recent years. In 2017, Rotorua Lakes Council engaged Infometrics to undertake a survey measuring how widespread Airbnb was in the Rotorua District. Their report was published in November 2017 [5].

A summary of data from the report is provided below. There may be some slight differences with the commercial accommodation data shown above due to the different time periods measured:

AIRBNB - ROTORUA DISTRICT

As shown in the table above, the occupancy rate for Airbnb over the year sits at 35%, slightly higher than the New Zealand average, although the average stay length is 3.1 nights, slightly lower than the New Zealand average of 3.9 nights.

[1] Tourism Research and Data, Ministry of Business, Innovation and Employment

[2] Commercial Accommodation includes Hotels, Motels, Apartments, Backpackers and Holiday Parks

[3] Accommodation Survey, Tourism Research and Data, Ministry of Business, Innovation and Employment

[4] APR Consultants, Rotorua Private Household Visitor Monitor, March 2018

[5] Infometrics, Measuring the scale and scope of Airbnb in Rotorua District for Rotorua Lakes Council, November 2017

[6] The average property rating (out of 5) by Airbnb guests

THE FARMSTAY OPPORTUNITY

Given the size of the tourism accommodation market in Rotorua, there are relatively few farm-stay options available in the Rotorua District, allowing considerable scope for growth. An appealing part of the farm-stay business is that each farm has a unique story to tell, each property being able to differentiate itself due to differing environments and characteristics.

A big question is ‘what type of farm tourism will fit into my type of farm?’. There are several factors to take into account when designing a farm-stay / farm tourism operation:

• Which market should I target?
• What are visitors looking for?
• What activities should I offer?
• How much involvement or time and resources are required?
• How much can I charge?
• What type of accommodation should I provide?

All of these questions are inter-related and affect the potential return.

Which market should I target?

A simple way to think about who to target is to segment the market, ie. think of the logical groupings that may be interested in coming to stay.  For example:

• Aucklanders looking for a rural escape;
• Families seeking opportunities for family fun;
• International Free and Independent Travellers (ie. non-Tour groups) seeking a real ‘Kiwi’ experience;
• High end tourists seeking unique experiences.

This starts to give an idea of the facilities that may be required, the likely rates that can be charged and what communications / media to use to reach them.

What are visitors looking for?

Catering well to customer requirements is a hallmark of a successful venture. To understand what tourists are looking for, the University of California Small Farm Program conducted a survey into the reasons tourists take a vacation [7].

Why People Vacation (top reasons):

• To rest and relax
• To build and strengthen relationships
• To improve health and well being
• To have an adventure
• To escape
• To gain knowledge
• To mark a special occasion
• To save money or time
• To reminisce

If a farm-stay / farm tourism operation can provide opportunities for guests to pursue some of these activities, this will enhance their ability to satisfy customers, encourage good reviews and help increase repeat visits.

Some of these activities require high involvement on the part of the owner and others require minimal involvement. Once an owner has determined the level of involvement they can commit to the farm tourism business, this will help determine who their target market should be.

What Activities should I offer?

The range of activities that could be made available depends on the type of farm, the farm environment and the resources available to allow guest participation on a farm.

The list of activities could include the following and more:

• Farm tours (likely to require a guide) which could include items of interest (if available) like old and new farm equipment, old and new farm buildings and any unusual features on the farm;
• Viewing of (and possible participation in) milking cows, moving stock, feeding out, etc;
• Animals for children to pat and feed – sheep, goats, chickens, duck, geese, ponies to ride;
• Horse riding, fishing, hunting, clay-bird shooting, archery, flying foxes;
• Bush walks, gardens, picnics, camping;
• Food processing if available (cheese, fruit), picking fruit if available;
• Wildlife viewing, photography, painting; and
• A shop selling merchandise (food, beverages and souvenirs) representative of the farm or region, eg. T-shirts, pens, mugs, caps, hats, wood carvings, pottery, etc.

In addition, there are the local Rotorua tourist attractions which add value for visitors and value to the overall farm-stay proposition.

How much involvement or time and resources are required?

The ability to cater to customers on a farm-stay or farm tourism operation will depend on the resources available and willingness of the farm owners to be involved. For example, if there is a couple on the farm, one partner may be able to focus on the farm-stay business while the other looks after the farm.

Personal attributes of the owners will also affect the level of involvement sought. Not everyone is keen to be involved in what is essentially the tourism industry. However, if one or both partners enjoys meeting people, is positive, outgoing and has an ability to engage others with their enthusiasm for farming, then this lends itself well to being able to provide a broader farm tourism business.

The farm owner’s level of involvement in the enterprise could be categorised into three options - low, medium and high involvement.

Low Involvement

Low level assumes minimal involvement by the farm owner and would presume that the business is more likely just a farm-stay operation with few farm tourism activities.

The farm-stay would involve the use of an accommodation manager, like Bachcare, who would look after bookings and have a local manager meet guests on arrival.  The accommodation manager would also provide on-going liaison with the owner in maintaining the accommodation property. Bachcare charge a commission, typically 20%.

The accommodation would likely be self-catering and to keep involvement low, there would be minimal on-farm activities available.

Medium Involvement

Medium level assumes the farm owner has some resource which they can dedicate to the farm-stay / farm tourism business increasing their level of involvement. They may wish to use a web listing site to promote the farmstay but would prefer to meet the guests on-site and personalise the experience.

The owner may provide breakfast, B&B style, and some activities on-farm, although these may be more guest-directed, eg. walks, biking, etc. rather than full guest participation on the farm.

There are many web listing sites including offthebeatentrack.co.nz, bnb.co.nz, ruralholidays,co.nz, airbnb.com, booking.com, etc.

High Involvement

High level assumes the owner has significant resources to devote to a farm tourism business. They would likely have their own website with booking facilities along with other website listings and a tailored profile of their farm tourism business. There would be promotion of a range of high involvement farm activities available including guests participating in mustering, milking and other on-farm activities.

These levels of involvement are not fixed and only intended as an indication of possibilities.

Arrangements could be mixed and matched to provide a tailored approach that is suitable for each farm owner and their particular farm-stay / farm tourism operation.

How much can I charge?

The accommodation rates you can charge are dependent on the quality of the guest accommodation and the uniqueness of your offering, ie. the combination of the accommodation, the environment and the activities you can offer.

Of approximately 20 farm-stays and rural B&Bs in the wider Rotorua district, nightly rates range from $105 per night (double) to $400 per night with an average accommodation rate of $193 per night. Some venues require a minimum two-night stay.
Generally, the higher quality of the facilities and service provided, the higher the price charged.

Using an annual occupancy rate similar to Airbnb of 35%, ie. 127 nights per year @ $200 per night gives a gross annual return of $25,400.

What type of accommodation should I provide?

For farms that have a spare worker’s cottage or sharemilker’s house, it may only require minor renovations to be made presentable. If there are spare bedrooms and bathrooms in the main farm house, these also could be made available for an authentic ‘Kiwi’ farm experience.

If there is no existing accommodation available, there are a range of small and medium housing options which can be transported to or built on the farm, from small housing pods to 1- and 2-bedroom cottages through to larger 2- and 3-bedroom transportable homes. Some suppliers include:

[7] Why People Vacation, UC Small Farm Program

Funding and Support

The Bay of Plenty Regional Council has funding available to support land use change. One fund, The Lake Rotorua Incentives Scheme, pays money for nitrogen reduced below a landowners Plan Change 10 allocation.

Landowners that reduce their nitrogen loss to the lake from their land use activity in perpetuity can be paid for this, up to $200 per kg. A minimum reduction of 300kg applies (which could be up to $60,000). This money could be used to pay for a cottage, establish a camp ground or establish any other farm based tourism business which could offset financial losses from agriculture.

In addition to the Incentives Scheme, the Council also has funding available to invest in trials of low nitrogen leaching land uses. The purpose of the Low Nitrogen Land Use Fund is to fund research that assists landowners reduce nitrogen by providing useful and practical information that is relevant to the Lake Rotorua catchment.

If a land owner wanted to trial a farm based tourism operation and share their knowledge on how this helped them to reduce nitrogen, then this fund could assist. More than $2 million of funding is still available in 2018 in this fund.

For more information on how to reduce nitrogen on your property, please contact the Bay of Plenty Regional Council.

SUPPORT ORGANISATIONS

Qualmark provides a rating system for tourist accommodation in New Zealand which may be useful to
think about when designing farm-stay accommodation:

Kiwihost can also be a valuable support organisation for businesses working with customers and helping
management and staff develop customer service skills. 

SOME FINAL POINTS ON MARKETING [8]:

• Happy customers are the most important key to success. They will return, and they will tell their
  friends about your operation;
• Cater to as “high end” a customer as you can. This is not a volume business, so you can’t go low-end
  and make money. If you target people with money and charge more for your service, people will
  expect more from you. You don’t have to be “upscale”, but you do need to offer a quality experience.
• Take care of details. Ensure the accommodation is clean and tidy. Make sure that your telephone is
  answered professionally (“Wilkins Farm” rather than “hello”). Your answering machine should have a
  professional message. Return calls and e-mail enquiries promptly.

[8]UC Small Farm Program

REGULATIONS

Rotorua Lakes Council is proposing to include new provisions in the District Plan relating to Holiday Rentals (this includes houses that are used for short-term holiday accommodation, e.g. houses let on BookaBach, Airbnb and other similar sites). The plan change will affect Holiday Rentals within the Residential and Rural Zones.

These new provisions currently fall under the category of Proposed Plan Change 6 Holiday Rental Accommodation, ie.
‘The use of a residential building, including temporary use of an established household unit, by paying guests, for short term holiday accommodation where the owner or manager is not resident on the site.’

Holiday Accommodation Conditions:

• No more than 12 people shall be accommodated on site at any one time;
• Parking - Appendix 4: 1 space for every 4 people the unit is designed to accommodate, provided that queued car parks may be included;
• The activity shall comply with the noise standards for the zone.

BUILDINGS

For farms in the Rural One zone, one household unit is permitted for every 15ha of effective farm area along with a secondary unit not exceeding 72m² gross floor area that is subsidiary to an existing household unit.
If significant land is converted from pasture to trees, further household units may be allowed, in addition to one per 15 ha, with a resource consent.

More information on the standards for erecting buildings on a farm are included in the District Plan, Part 9 Rural, Section 6 Performance Standards.

FOOD SAFETY REQUIREMENTS

Farm-stays and rural B&Bs are likely to be exempt from operating under a Food Control Plan or National Programme if serving less than 10 people, resident guests, or breakfasts only. However, you still must ensure your food is safe and suitable to eat. More information is available at the MPI website: https://www.mpi.govt.nz/food-safety/food-act-2014/where-do-i-fit/.

Useful Links

Destination Rotorua

Rotorua Economic Development Limited
Level 3, 1172 Haupapa Street, Private Bag 3007
Rotorua Mail Centre, Rotorua 3046
E: rebecca@rotoruanz.com
T: 07 351 7100
W: www.rotoruanz.com

Tourism NZ

T: 09 914 4780
W: www.tourismnewzealand.com

Rotorua Lakes Council

Civic Centre
1061 Haupapa Street
Rotorua
T: 07 348 4199
E: info@rotorualc.nz

Bay of Plenty Regional Council Incentives Team

1125 Arawa Street
Rotorua
T: 027 456 1504
E: jude.pani@boprc.govt.nz