Finance & Funding in Travel and Tourism - sources of funding

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

Sources & Distribution of
Funding

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.

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.

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.

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

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

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.

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.

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).

Private Funding/Investment

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

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.

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.

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.

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.

National Tourism
Infrastructure

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.

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)

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.

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.

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.

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.

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.

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.

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.

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

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

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.

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

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.

Securing Funding from
Banks

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.

Funding Projects in the
Tourism Sector

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.

New Zealand Tourism –
Capital Projects

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.

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.

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.

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

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.

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.

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.

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.

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.

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.

Finance & Funding in Travel and Tourism - sources of funding

More Related Content

What's hot (20)

Viewers also liked (9)

Similar to Finance & Funding in Travel and Tourism - sources of funding (20)

More from Karen Houston (20)

Recently uploaded (20)

Finance & Funding in Travel and Tourism - sources of funding