Finance & Funding in Travel and Tourism - sources of funding


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Sources and distribution of funding for the development of capital projects associated with tourism

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Finance & Funding in Travel and Tourism - sources of funding

  1. 1. The International Travel College of New Zealand 1 Finance & Funding in the Travel and Tourism Sector Unit #2 – Learning Outcome 4 Sources and distribution of funding for the development of capital projects associated with tourism
  2. 2. The International Travel College of New Zealand 2 Sources & Distribution of Funding
  3. 3. The International Travel College of New Zealand 3 Ministry of Tourism • MOT does not provide funding for tourism businesses, but has a Tourism Demand Subsidy Scheme that helps small communities with high tourism to invest in the infrastructure (water and sewerage) to sustain their tourism industry. • The Minister of Tourism also holds a discretionary fund (Tourism Facilities Grants Programme) that provides funding for non- commercial tourism facilities, in order to enhance overseas visitors' understanding and enjoyment of New Zealand. • The facilities must provide public good benefits, must not compete directly with an existing commercial venture, or be for commercial gain. • MOT also makes freely available a large body of tourism research, relevant to business planning, funding proposals and ongoing business decision-making.
  4. 4. The International Travel College of New Zealand 4 Tourism Growth Partnership • The Prime Minister released criteria in July 2013 for applications for funds from the Tourism Growth Partnership, a new government initiative aimed at boosting innovation and lifting productivity in the tourism sector. • Under the Tourism Growth Partnership, the government is making $28 million available over four years to support innovative projects that will create new opportunities and overcome barriers to growth in the tourism sector. • The $158 million investment is focused on ‘achieving growth in tourism earnings; however, simply attracting more, higher-spending visitors is not enough.’ • For each project approved for investment, the government will provide up to 50% of the required funding. • Funding will be linked to key milestones • Investment will focus on projects that contribute to one or both of the following objectives:  Boosting innovation in the tourism value chain so as to ensure that NZ gains more from the international visitor spend  Lifting the productivity of the tourism sector • Projects need to be additional to existing or planned activity, not to fund regular or day-to-day business activities • Investments should not duplicate existing central government investment in tourism • The TGP will generally not invest in business start-ups • Funding for TGP projects will be for up to three years • The Tourism Growth Partnership will be administered by the Ministry of Business, Innovation and Employment (MBIE). • MBIE will open the first funding round later in 2013 and will call for investment proposals at that time. Full details will be published on the MBIE website. • The Portfolio Statement sets out the objectives of the Tourism Growth Partnership, and signals the type and scale of projects that will attract investment, as well as who can apply.
  5. 5. The International Travel College of New Zealand 5 TGP Fund Application Process Step 1: • MBIE will open a funding round and call for investment proposals. It is likely that there will be two funding rounds announced per financial year. Step 2: • An Independent Panel of Experts (IPE) appointed by MBIE will assess proposals and determine which should be advanced. • The IPE will consist of persons with expertise in international business and tourism Step 3: • Co-investors with proposals that have been identified as having merit will be invited to develop business plans. • The IPE will provide advice on business plans to the Chief Executive (CE) of MBIE. Step 4: • The CE of MBIE will decide which projects will receive TGP investment. Step 5: • Funding agreements will be prepared and signed by, or on behalf of, the co-investors and MBIE.
  6. 6. The International Travel College of New Zealand 6 TGP Funding Assessment Process • Proposals will be assessed on two elements:  Eligibility – proposals must satisfy eligibility requirements  Assessment – proposals will be assessed against stated criteria • The Panel of Experts will take into account: • How well proposals perform against assessment criteria • How well proposals perform compared to other proposals submitted • The amount of TGP funding available for investment
  7. 7. The International Travel College of New Zealand 7 Tourism NZ funding • Tourism New Zealand is funded by the government to market and promote New Zealand as a tourist destination. • Government funding totals around $84million per year • In 2013 an additional $158 million of funding (over a 4 year period) for the tourism sector was awarded to Tourism New Zealand. • The funds will be targeted towards higher spending visitors, with additional amounts directed into promoting the South Island visitor industry, still impacted by the 2011 earthquakes. • The funds will also be used to support and grow emerging and existing markets. • A significant amount of funding is being used to promote New Zealand to the Chinese market. • Tourism New Zealand initiatives include the organization of marketing trips and expos overseas, and the organization of inbound trips to New Zealand with overseas buyers. • In 20123 for example, the Prime Minister, in his role as Tourism Ministers, welcomed 44 Chinese travel buyers and four Chinese media delegates to New Zealand's biggest international tourism showcase, TRENZ
  8. 8. The International Travel College of New Zealand 8 NZ Trade and Enterprise • New Zealand Trade and Enterprise (NZTE) is a crown entity that acts as Government’s national economic development agency. • Its Board is primarily appointed from the private sector. • NZTE works with industry sectors and businesses, and is active on both a global and regional level. • It provides a range of services that encourage both investment and enterprise. • NZTE works with high-growth industry sectors such as biotechnology and agritech, creative industries, Information and Communication Technology (ICT) and tourism to: – support New Zealand businesses to build business capability – improve the business environment for enterprise and growth, and – increase the international connectedness of New Zealand businesses. • Services and programmes that NZTE offer to businesses include training, market information and funding assistance, and facilitation of opportunities for networking and partnerships. • NZTE works globally by facilitating the sustained and profitable participation of New Zealand businesses and regions in international markets. It also works on a regional level with local government, economic development agencies and other regional allies – to grow their regional economic base – to identify and address barriers to growth, and – to stimulate and develop new business opportunities. • Tourism is a key sector identified by NZTE as having the potential for high growth • NZTE contributes to the tourism sector through its business capability products • Tourism-related regional initiatives are provided by NZTE through the Regional Partnership Programme.
  9. 9. The International Travel College of New Zealand 9 Environmentally Sustainable Tourism Funding • Funding for sustainable tourism in regions, introduced in 2008. • $840,000 committed to help tourism businesses in the regions improve their environmental sustainability. • The Sustainable Tourism Advisers in Regions (STAR) Project is an evolution of the Sustainable Tourism Charter which was piloted in 2004. • This funding pool helps up to eight regions in New Zealand fund the costs of an adviser who will work with tourism operators to reduce their business’ impact on the environment. • The sustainable tourism project is based in six regions in New Zealand (Northland, Rotorua, Bay of Plenty, Nelson. Lake Wanaka and Southland/Fiordland) and utilises resources from the New Zealand Tourism Strategy 2010 Tourism Strategy Fund. • It is based on the commitments of MFE and the aims of the New Zealand Tourism Strategy 2010, and focuses on quality economic growth, collaboration between government and industry, sustainability (cultural, social, environmental and economic) and maximisation of tourism’s growth potential.
  10. 10. The International Travel College of New Zealand 10 Canterbury Tourism Partnership • One of the ways the government is supporting Christchurch’s recovery is through the Canterbury Tourism Partnership. • The Partnership is made up of the Ministry, Christchurch International Airport Limited and the Christchurch City Council. • It has committed a $3 million funding package to support Christchurch & Canterbury Tourism, the regional tourism organisation, in leading tourism recovery. • The Partnership is supporting initiatives including South Island and regional joint venture marketing campaigns and developing a long term recovery plan for the tourism sector. • This includes working with the Christchurch Central Development Unit on the implementation of the Christchurch Central Recovery Plan, which includes details on the locations of key anchor projects (including a convention centre development, and new Avon River Precinct).
  11. 11. The International Travel College of New Zealand 11 Private Funding/Investment
  12. 12. The International Travel College of New Zealand 12 Types of Private Investment Funds: Seed Capital (also known as Start-up Capital) • Seed Capital refers to the cash you need to get your business started. • Seed money can be used to pay for such preliminary operations as market research and product development. • This cash could come from your family members, friends and other external individuals. • The amount of money is usually relatively small because the business is still in the idea or conceptual stage. • Pre-revenue stage and seed capital is needed for research & development, to cover initial operating expenses until a product or service can start generating revenue, and to attract the attention of venture capitalists. • Often obtained in exchange for an equity stake in the enterprise • Banks and venture capital investors view seed capital as an "at risk" investment by the promoters of a new venture, which represents a meaningful and tangible commitment on their part to making the business a success. • Frequently, capital providers will want to wait until a business is a little more mature before making the larger investments that typify the early stage financing of venture capital funding. • Investments made are usually lower (in the tens of thousands to the hundreds of thousands of dollars range) as against normal venture capital investment
  13. 13. The International Travel College of New Zealand 13 Venture Capital • Money provided by investors to startup firms and small businesses with perceived long-term growth potential. • Typically entails high risk for the investor, but it has the potential for above- average returns. • Venture capital can also include managerial and technical expertise. • Most venture capital comes from a group of wealthy investors, investment banks and other financial institutions that pool such investments or partnerships. • This form of raising capital is popular among new companies or ventures with limited operating history, which cannot raise funds by issuing debt. • The downside for entrepreneurs is that venture capitalists usually get a say in company decisions, in addition to a portion of the equity. • Investments will often result in a seat on the Board and investors may take a hand in running the business. • New businesses that have gone past the preliminary stages and are in full operation, may still have trouble securing bank loans, and thus seek out ‘angel investors’ and venture capitalists.
  14. 14. The International Travel College of New Zealand 14 Private Equity • Private equity is a source of investment capital from high net worth individuals and institutions for the purpose of investing and acquiring equity ownership in companies. • A private equity investment will generally be made by a private equity firm, a venture capital firm or an angel investor. • Each of these categories of investor has its own set of goals, preferences and investment strategies; however, all provide working capital to a target company to nurture expansion, new-product development, or restructuring of the company’s operations, management, or ownership. • Partners at private equity firms raise funds and manage these monies for the purpose of yielding favourable returns for their shareholder clients, typically with an investment horizon between four and seven years. • The minimum amount of capital required for investors can vary depending on the firm and fund raised. Some funds have a $250,000 minimum investment requirement; others can require millions of dollars.
  15. 15. The International Travel College of New Zealand 15 Angel Investors • An angel investor or angel (also known as a business angel or informal investor) is an affluent individual who provides capital for a business start- up, usually in exchange for convertible debt or ownership equity. • A small but increasing number of angel investors organize themselves into angel groups or angel networks to share research and pool their investment capital, as well as to provide advice to their portfolio companies. • Sophisticated angel investors are known as super angels. • This is similar to a ‘Dragons Den’ process in which entrepreneurs can ‘pitch’ their business idea to investors for either seed or venture capital. • Unlike Dragons Den the process is often initiatedd online and both entrepreneurs and investors can browse available ideas and investors.
  16. 16. The International Travel College of New Zealand 16 Angel Investors cont…. • Originally, the term "angel" was coined to refer to the people who financed Broadway plays when all else failed. • Today this term has become common among the investment community to refer to an individual that invests their own personal funds in businesses. • In New Zealand, it is estimated that there are well over 200,000 potential angel investors that annually invest approximately 500 million in New Zealand businesses and currently own over 1 billion in existing equity. • This represents roughly 7% of what the banks are investing. • Statistics show that this figure trumps that of venture capital lending. • The New Zealand labour market and productivity centre estimates that angel investments have financed approximately twice as many firms as any other form of external equity investment, including institutional venture capital.
  17. 17. The International Travel College of New Zealand 17 National Tourism Infrastructure
  18. 18. The International Travel College of New Zealand 18 Funding Tourism Infrastructure • The tourism industry requires a vast amount of infrastructure and organization to support the work of tourism operators. • National and Local government are crucial players in the tourism industry. • National government operates and funds key bodies that play a role in the function of tourism, such as:  the Ministry of Tourism  Department of Conservation (+Parks and Recreation)  Immigration New Zealand  Ministry of Business, Innovation and Employment (MBIE),  Ministry of Culture and Heritage  Historic Places Trust  Ministry of Foreign Affairs and Trade (MFAT)  Land Transport New Zealand  Ministry of Transport  Trade and Enterprise New Zealand  Tourism Research Institute New Zealand  Customs Service NZ  NZ Maori Tourism Council • All these departments are involved in some way with tourism, and are in receipt of government funding to carry out their activities.
  19. 19. The International Travel College of New Zealand 19 The Ministry for Culture and Heritage • In addition to funding major capital projects of cultural or heritage significance, the Ministry funds some of New Zealand's most iconic arts, media, heritage and sports organisations such as the New Zealand Historic Places Trust and the Royal New Zealand Ballet:  Creative New Zealand (Arts Council of New Zealand)  New Zealand Music Commission  New Zealand Symphony Orchestra  Royal New Zealand Ballet  Te Matatini Society Inc.  Broadcasting Standards Authority  Freeview  New Zealand Film Commission  NZ on Air  Radio New Zealand International  Television New Zealand  Antarctic Heritage Trust  Museum of New Zealand Te Papa Tongarewa (Te Papa)  New Zealand Film Archive  New Zealand Historic Places Trust  Pukaki Trust  Te Māori Manaaki Taonga Trust  Drug Free Sport New Zealand  Sport New Zealand (Sport NZ)
  20. 20. The International Travel College of New Zealand 20 The New Zealand Historic Places Trust (NZHPT) • The New Zealand Historic Places Trust (NZHPT) is a crown entity, New Zealand’s leading national historic heritage agency and guardian of Aotearoa New Zealand’s national heritage. • The NZHPT's work includes identifying our heritage places, seeking to ensure they survive for appreciation by current and future generations, and fostering that appreciation by recording and sharing their stories. • The NZHPT was established by an Act of Parliament in 1954. The NZHPT is established as an autonomous Crown Entity under the Crown Entities Act 2004, and is supported by the Government and funded via Vote Arts, Culture and Heritage through the Ministry for Culture and Heritage. Its work, powers and functions are prescribed by the Historic Places Act 1993.
  21. 21. The International Travel College of New Zealand 21 National Heritage Preservation Incentive Fund • The National Heritage Preservation Incentive Fund, administered by the New Zealand Historic Places Trust, provides financial incentives to encourage the conservation of nationally significant heritage places in private ownership. • Priority is given to heritage places of national significance which need conservation work and heritage places of national significance where conservation work is planned and could be improved through extra funding. • Any private owner whose heritage properties and conservation projects meet the eligibility requirements will be eligible to apply to the fund. • Public sector agencies (government departments, Crown entities, state- owned enterprises, regional councils, territorial authorities, local authority trading enterprises) and persons and agencies eligible for funding from the Lottery Grants Board (for example incorporated societies, charitable trusts, companies with charitable status) will not be eligible to apply to the fund. • Any property in private ownership that is either registered as a Category I historic place under the Historic Places Act, or has been notified for Category I registration, is eligible to apply to the fund.
  22. 22. The International Travel College of New Zealand 22 Maori Tourism • As the indigenous people of New Zealand, Māori have a special relationship and place in the tourism industry. • This relationship means Māori tourism is uniquely placed to offer visitors deeper experiences that weave culture and myth into New Zealand’s landscape. • New Zealand Māori Tourism (NZMT) is the national Māori tourism organisation, representing and advocating for more than 200 Māori tourism businesses. • Based in Wellington, NZMT’s role is to influence investment decisions in Māori tourism, foster relationships within the sector and across the tourism industry, assist policy development, and to develop and implement strategies that encourage sector growth. • It also provides an accessible point of contact with Māori tourism operators and stakeholders. • Māori culture is unique to New Zealand and offers a critical point of difference for New Zealand tourism. • The Government has recognised the value that Māori tourism can add to the overseas visitor experience. • It has mandated NZMT to develop and implement a Māori Tourism Strategy and initiate a Māori Tourism Action Plan.
  23. 23. The International Travel College of New Zealand 23 Maori Tourism Action Plan • In 2010, the government set aside $4.5 million in funding over three years to strengthen and promote Māori tourism, recognising that there is potential to increase the value of Māori tourism to the New Zealand economy as a whole, and to improve economic outcomes for Māori in particular. • New Zealand Māori Tourism led the development of a Māori Tourism Action Plan to guide the investment. • A group of agencies with interests in tourism, and Māori tourism specifically, was formed to support the development and implementation of the Action Plan. • This group comprises representatives of the Ministry of Business, Innovation and Employment, Te Puni Kōkiri, Tourism New Zealand, New Zealand Trade and Enterprise, the Ministry for Culture and Heritage and the Department of Conservation. • The Māori Tourism Action Plan seeks to raise the quality and consistency of Māori tourism products, improve the business capability and performance of Māori tourism operators and better promote Māori tourism. • It is based around five interrelated and linked core strategic areas that are supported by three parallel enabling strategies. • A key feature is recognition of the value of integrating Māori tourism into existing investment in the tourism sector.
  24. 24. The International Travel College of New Zealand 24 Tourism NZ working with Maori Tourism • Building the organisation's own internal capacity and understanding of Māori culture • Helping build the capability of Māori tourism businesses • Working with international travel sellers to raise awareness of Māori tourism products – Working with international travel sellers to help them understand Māori culture and the variety of cultural tourism experiences on offer in New Zealand, and to support them in selling these experiences to their customers. – Tourism New Zealand offers Māori tourism operators support in selling their tourism experiences offshore. – Opportunities for Māori operators to get involved in our offshore trade events, as well as trade familiarisation and international media programmes. – The Māori Tourism Mentoring Programme developed and delivered by Tautoko Enterprise Support Ltd also offers assistance specific to Māori tourism businesses.
  25. 25. The International Travel College of New Zealand 25 Tautoko Enterprise Support • Tautoko Enterprise Support Limited is a New Zealand-based consortium of professionals offering advice and support to Maori and other indigenous businesses and organisations. • The consortium was designed specifically as a way to bring together business advisors, mentors and sector specialists with a common interest in fostering and developing Maori commercial interests. • Since its inception in 2003, this kaupapa has been extended to supporting other indigenous peoples around the Asia-Pacific region. • Tautoko Enterprise Support has a strong focus on assisting the tourism sector, especially Maori and Cultural tourism. • In 2009/10 Tautoko Enterprise Support delivered the Maori Tourism Mentoring Programme for the Ministry of Tourism. • This programme assisted a number of Maori cultural tourism businesses around New Zealand to be more profitable and sustainable, by providing them with business assessment and mentoring support services. • The support included a purpose-built programme for ten ‘first time’ businesses to participate at TRENZ (the industry’s largest tourism showcase) as delegates of the Ministry of Tourism.
  26. 26. The International Travel College of New Zealand 26 Te Puni Kokiri (Ministry of Maori Development) • Te Puni Kokiri - the Ministry of Maori Development, the Crown’s principal adviser on Crown-Māori relationships. • Te Puni Kokiri guides Māori public policy by advising Government on policy affecting Māori wellbeing and development. • Te Puni Kokiri means a group moving forward together. As the name implies, TPK seeks to harness the collective talents of Māori to produce a stronger New Zealand. Te Puni Kokiri Funding: • Te Puni Kōkiri's Māori policy framework, the Māori Potential Approach, is about realising Māori Potential or Māori succeeding as Māori. • The ultimate aim of the Māori Potential Approach is to better position Māori to build and leverage off their collective resources, knowledge, skills and leadership capability to improve their overall quality of life.
  27. 27. The International Travel College of New Zealand 27 The Māori Potential Fund • The Māori Potential Fund supports the Māori Potential Approach by enabling outcomes-based investments that help realise Māori potential. • This is done by using knowledge obtained through Te Puni Kōkiri's strategic relationships with Māori communities and organisations to make investments in excess of $23 million a year. Stream One: Matauranga (Knowledge/Skills) • Developing Māori language and culture Stream Two: Whakamana (Leadership) • Whakamana (Leadership) aims to enable the strengthening of Māori leadership, governance, management and succession planning. Stream Three: Rawa (Resources) • Rawa (Resources) aims to enable increased Māori access to, and use, development and retention of resources for collective benefit ie maximising Māori collective assets, such as land, oceans, natural resources (wind, water), aquaculture, geothermal
  28. 28. The International Travel College of New Zealand 28 Poutama Trust • The Poutama Trust works closely with TPK in helping Maori businesses to setup and flourish. • They can help businesses connect with others and provide some investment to Maori owned tourism businesses. • Unlike TPK they are allowed to offer funding to privately owned for-profit businesses. • Investments are not made to help prop up a business, but rather to help an existing business grow • Applicants must meet certain criteria, including being able to provide evidence that they are Maori. • Businesses seeking funding must have been operating for at least 12 months, with a turnover of at least $60,000 per year, and must provide financial statements for the previous 12 months • Applicants must also provide evidence of having tried to secure funding elsewhere without success, such as through banks or private investors
  29. 29. The International Travel College of New Zealand 29 Local Government in Tourism • By statute, local government is required to manage the natural and cultural resources of New Zealand on which tourism relies. • The provision of a visitor information network around the country is an important element of a successful tourism sector as the network helps to co-ordinate and communicate information on the tourism products with visitors. • The VIC network in New Zealand also act as booking agencies for travel and tourism products. • Local government is the primary funding source for the Regional Tourism Organisations that market their area, and the Visitor Information Centres that inform New Zealand’s visitors. • Regional, District and City Councils and Community Boards are also responsible for some of the following activities:  providing much of the tourism infrastructure such as sewage, water supply, public toilets, roading, rubbish removal, etc  contributing financially to regional promotion organisations and visitor centres  providing the regional and local planning framework  administering the Resource Management Act, under which resource consents are allocated.
  30. 30. The International Travel College of New Zealand 30 Regional Tourism Organisations (RTOs) • RTO’s act as a bridge between tourism operators, national tourism bodies and local and central government. • They are responsible for the promotion of their regions to potential domestic and international visitors. • There are currently 29 RTOs across New Zealand, which vary in size, structure, and the scope of activities they undertake. RTOs are largely funded by local authorities. • Following the New Zealand Tourism Strategy 2010, RTOs united to form Regional Tourism Organisations New Zealand (RTONZ), a non-incorporated collective that plans to seek charitable trust status. • RTONZ has been involved in a range of projects, ranging from examining the roles of tourism organisations within New Zealand to reviewing the research and monitoring needs of RTOs, to building relationships with Māori Regional Tourism Groups. • The largest Auckland RTO is Tourism Auckland and is a charitable trust. • Tourism Auckland represents the region on key local and national tourism forums
  31. 31. The International Travel College of New Zealand 31 Auckland Tourism, Events and Economic Development (ATEED) • ATEED is a key government/council funded economic development agency dedicated to business activities of Auckland. • ATEED facilitates tourism, major events, business and industry sector development and activities to attract investment • The organisation is the guardian of the Auckland regional brand, responsible for marketing Auckland as a destination. The organisation carries out communications, marketing and strategy to support its activities. • ATEED consists of four business units: Destination, Business and Sector Development, Planning and Performance, and Marketing and Communications. • The Destination and Marketing team at ATEED works to attract more visitors to Auckland, and raise the city’s international profile. • The Business Attraction and Investment team at ATEED works to promote targeted business growth in Auckland. • Corporate Relations is responsible for the development of stakeholder and communications strategies. • ATEED funds major events in Auckland and in 2013 committed almost $6million to local events such as NZ Fashion Week, Pasifika, the Lantern festival and the World Netball Series. • Their funding is contestable with organizations able to submit proposals for funds.
  32. 32. The International Travel College of New Zealand 32 Securing Funding from Banks
  33. 33. The International Travel College of New Zealand 33 Bank Loans: BNZ • The BNZ TotalMoney business term loan is secured by the applicants residential property, is for small businesses with turnover less than $1m. • It lets the business owner use the combined balances of their TotalMoney business accounts to reduce the amount of interest pauf on a variable business loan. • By paying less interest you pay back more of your original loan (the principal) with each repayment. • TotalMoney looks at the combined balances of the nominated business and transaction accounts and subtracts these from the total owing on the loan, reducing the amount of interest due. This is often called an 'offsetting loan'. • For example, if you have $25,000 in your business accounts and offset this against a $150,000 business term loan, you'll only pay interest on $125,000. • TotalMoney gives borrowers the flexibility to make extra loan repayments, on top of the minimum scheduled repayments, whenever you like. • There is also have flexibility on the term of thr loan – 1 year up to 25 years. The minimum starting loan size is $10,000. • TotalMoney loans must be secured by a mortgage over a residential property.
  34. 34. The International Travel College of New Zealand 34 Funding Projects in the Tourism Sector
  35. 35. The International Travel College of New Zealand 35 Investment Incentives 1. Reduction of capital costs: Capital grants or loans at preferential rates – cash up front to help fund the project or low interest rate loans to reduce the financial costs of the project Interest rate relief – suspension of payments of interest for a given period of time A moratorium on loan repayments for a number of years – no loan repayments at all until the project is producing profit Provision of infrastructure – the building of roads, provision of power, telecommunications or other vital services Provision of land on concessional terms – land is given or leased to the developer to help fund a building project Tariff exemption on construction materials – removal of local taxes which make the building materials more affordable Equity participation – local or national authorities take a share in the project 2. Reduction of operating costs In order to improve operating viability governments may grant tax ‘holidays’, give a labour or training subsidy, offer tariff exemption on imported materials and supplies, or provide special depreciation allowances. 3. Investment security In order to win investors confidence in an industry that is very sensitive to the political environment and economic climate, governments may offer a range of incentives: guarantee a project against nationalization offer foreign exchange facilities freely whatever the political system free repatriation of invested capital profits and dividends provision of work permits for key personnel offer technical advice.
  36. 36. The International Travel College of New Zealand 36 New Zealand Tourism – Capital Projects
  37. 37. The International Travel College of New Zealand 37 The New Zealand Cycle Trail • A national project to build a world class network of cycle trails, this project was launched in 2009 both as a tourism and a job-creation initiative • A network of cycle trails that would not only provide a healthy and enjoyable way for Kiwis and international visitors to see the country, but would also generate economic, social and environmental benefits for communities. • Nga Haerenga - The New Zealand Cycle Trail' is a partnership project between the Government and the Green Party of Aotearoa New Zealand. • The Government invested $50 million into turning this idea into a reality – with a dedicated project team within the Ministry of Business, Innovation and Employment and partnership organisations from regions across New Zealand. • In addition to the government's investment, the commitment of the local communities involved generated a further $30 million of co-funding towards the construction of the inaugural Great Rides. • The Great Rides are the premier rides on the New Zealand Cycle Trail. They are predominantly off-road trails that showcase the very best of New Zealand's landscape, environment, culture and heritage. • The New Zealand Cycle Trail has since expanded to include other existing off-road trails that meet the 'Great Ride' standard, such as the Otago Central Rail Trail - the 'original' Great Ride that in part provided the catalyst for this project. • Individual tourism businesses can become an ‘Official Partner’ provided the business meets and maintains specified cycle-friendly standards. Businesses include accommodation providers, cycle hire companies, food and beverage operators, transport and attractions. • No funding is available for organisations who partner in the Cycle Trail but there are distinct business advantages in participating.
  38. 38. The International Travel College of New Zealand 38 Rabbit Ridge Bike Resort • A year-round biking resort catering for beginner and intermediate riders opened in May 2013 on 400 hectares of land adjacent to Queenstown’s award-winning Gibbston Valley Winery. • The Rabbit Ridge Bike Resort, which is located on Gibbston Valley Station rabbit- prone land, will ultimately feature 30km of tracks suitable for all levels of riders and will also include a new bike trail linking the bike resort with Gibbston Valley Winery. • Gibbston Valley Winery and local bike tour operator Around the Basin have combined to create the dedicated bike resort at an estimated initial outlay of $100,000 with further investment to come. • Designed and developed by trail builder Ben Rafferty, the first tracks are almost complete and will provide a unique family-friendly resort with a base area for relaxing between runs. • Gibbston Valley Station has been granted consent to build a resort which will include accommodation, a commercial hub and various recreational facilities such as a golf course and walking tracks, and the bike park is seen as a natural addition to these outdoor resort activities. • It is anticipated that construction for the hotel will begin in 2014. This first hotel development is located in close proximity to Gibbston Valley Winery and is set amongst the vines.
  39. 39. The International Travel College of New Zealand 39 Capital Construction Projects in the Museum Sector • The Regional Museums Policy for Capital Construction Projects is a capital construction assistance fund which prioritises those few non-central government funded museums and art galleries holding collections of the greatest national significance. • The Regional Museums Policy for Capital Construction Projects is a ‘fund of last resort’. • It enables government to assist those few regional museums and art galleries housing collections of greatest national significance to New Zealanders. Applications must be for major construction projects which will improve access to and care of these collections. Exhibition costs are excluded. • This fund does not support museums and galleries with access to alternative sources of central government vote funding, and/or institutions holding collections that are predominantly of local and/or regional significance (as opposed to national significance). • 2013 funding round totalled $3million • Applications for larger projects seeking grant allocations over more than one year may be considered. • While the government may indicate a level of support to a project that anticipates funding being provided over several years, no agreements will be entered into that make such contributions binding.
  40. 40. The International Travel College of New Zealand 40 Regional Museums Policy funded projects • Auckland Art Gallery - earthquake strengthening, extension, and redevelopment of its heritage building - $30million funding of the $121 million cost. • Auckland War Memorial Museum - Grand Atrium Project - $27 million of the $64 million cost. • Hawke's Bay Museum and Art Gallery - redevelopment of its heritage building. $6million of the $18 million cost • Toitū Otago Settlers Museum, Dunedin - this project included a new collection storage building and the earthquake strengthening and redevelopment of several heritage buildings. $6million of the $38 million cost • Rotorua Museum of Art and History - extension and redevelopment of its heritage building, $7.5 million of $21million cost. • New Zealand Portrait Gallery - $750,000 • Hawke’s Bay Museum and Art Gallery - $6million. • $4 million for Len Lye Centre in New Plymouth. • Tairawhiti Museum - $600,000 of the $7.1 million costs
  41. 41. The International Travel College of New Zealand 41 Te Papa Tongarewa • The Museum of New Zealand Te Papa Tongarewa is the national museum and art gallery of New Zealand, located in Wellington. • It is branded and commonly known as Te Papa and Our Place; "Te Papa Tongarewa" is broadly translatable as "the place of treasures of this land". • It was built at a cost of $300 million, taking four years to build before it opened in 1998. • Te Papa was established in 1992 under its own Act. • Te Papa is an autonomous Crown entity for the purposes of the Crown Entities Act 2004. • It receives approximately 50% of its funding from the Crown and its Board reports to the Minister on its performance through the Ministry for Culture and Heritage. • Much of the capital to build Te Papa was from the government funding plus donations. • It costs around $44 million dollars annually to run Te Papa. Of that $23 million comes from Government and $12 million from the museum's commercial activities. • A further $6 million comes from fundraising activities and $2.5 million from the City Council. • The museum directly and indirectly contributes around $100 million a year to Wellington's economy.
  42. 42. The International Travel College of New Zealand 42 NZ Trade & Enterprise ‘Better by Capital’ • Government service in Auckland to help businesses raise capital and accelerate their international growth. • New Zealand Trade and Enterprise’s Better by Capital service is one of 50 initiatives in the Government’s Business Growth Agenda, Building Capital Markets. • Companies need access to capital across all stages of the business lifecycle to achieve their growth objectives. • Better by Capital was developed following research commissioned by NZTE which found that some potentially high-growth firms find it difficult to access capital • Companies often don’t know the value capital options can offer • Some firms, particularly high tech firms with largely intangible assets, lack the collateral and cash-flow to obtain and service debt finance. • Firms lack the capability to source and manage capital. • A shortage of capital intermediaries (fund managers, angel investors, high net worth individuals) with the skills required to raise risk capital and invest it in internationally-focused, high-growth firms. • A lack of information for firms about the capital raising process and for the investor community on good investment opportunities. • Better by Capital will be available to NZTE customers and NZTE will work with companies to develop a tailored capital plan as early as possible which will identify the work a company needs to do to get ready for capita. • Better by Capital is designed to demystify the capital raising process, to give New Zealand businesses the best chance of accessing the right capital, at the right time, to help fund their international growth. • The service is administered by NZTE New Zealand-based, and international capital specialists, and is delivered in partnership with private sector specialists with capital raising experience.
  43. 43. The International Travel College of New Zealand 43 New Zealand International Convention Centre • This tourism project is very current, with final agreement between the Government, Auckland Council and Sky City only being signed off in July 2013. • This project has been a long time in the discussing and planning stages, with much controversy around the impacts of gambling on the community, and the trade off between the government and the commercially driven Sky City.
  44. 44. The International Travel College of New Zealand 44 European Regional Development Fund • European funding • The purpose of the ERDF is to ‘strengthen economic and social cohesion in the European Union by redressing the imbalances between different regions.’ In summary, the ERDF finances: • Direct subsidies for investments made by companies (in particular SMEs) to create sustainable employment. • Infrastructures linked especially to research and innovation, telecommunications, the environment, energy and transport. • Financial instruments (venture capital funds, local development funds...) to support regional and local development and favour cooperation between cities and regions. • Technical assistance measures.
  45. 45. The International Travel College of New Zealand 45 European Social Fund • In addition to the ERDF the European Union manages an enormous funding pool – the European Social Fund representing more than 75billion Euros each year • These funds focus on increasing employment, improving working conditions, stimulating mobility of the workforce, helping businesses and workers to adapt to changes, and improving social status and employment opportunities of less-favoured individuals and those who are facing difficulties finding employment such as people with disabilities, older workers, young people, women and migrants. • As much as 10% of the total EU budget is dedicated to funding projects which improve employment through the ESF which translates into 75 billion Euros. • The distribution of the ESF funding varies from one region to another and primarily depends on the GDP per capita in comparison to the EU average GDP. • Regions with the lowest GDP per capita receive more funds than the wealthy regions which complies with the objectives of both the ESF as well as the Regional Policy of the EU which strive to improve economic and social situation in the poorest regions in order to reduce the disparity within the EU.
  46. 46. The International Travel College of New Zealand 46 Funding tourism projects through local taxation • In some regions funding for tourism infrastructure projects is provided through local taxation measures, such as the hotel tax system in Revelstoke in Canada, a ski resort. • The tax was added to the price of hotel and motel rooms, and that tax returned to the community and used for tourism infrastructure projects. • In 2011 around $800,000 was used for 10 tourism projects. • In the same area they are already making plans for further tourism projects using the same funding mechanism, totaling around $2.3million.