By Julie White, CEO Hospitality New Zealand
With the 2020 General Election tomorrow (Oct 17), policy promises have been announced daily and proposed roadmaps to the nation’s economic recovery are being presented. As most industries are still in survival mode, it’s fair to say the political climate is electrified this campaign season.
We’re all well aware of the difference Government funding and support can have, especially in today’s climate. The allocation of the $14 billion COVID-19 Response and Recovery Fund has been closely watched, and with each round of funding and policy announcements there have been winners and losers.
What the new Government brings to the nation in the next term, will play a huge part in moulding the new normal as our nation looks to rebuild from the devastating impact of COVID-19.
COVID-19 and hospitality
Since March, the country has dealt with fluctuating in and out of Alert Levels, which has had an immense impact on the operations of all hospitality businesses. Pre-COVID, the hospitality sector contributed $6 billion annually to New Zealand’s GDP, yet the call for sector-specific assistance has fallen on deaf ears – we’ve been the forgotten industry. Every subsidy, grant and support package delivered has failed to recognise the value we bring – not only economically, but socially too.
We continue to be one of the most affected industries, as alert level restrictions require costly pivoting and border closures have resulted in a significantly reduced market and skill shortages due to very limited access to migrant workers. Coupled with the fact that Kiwis now have less disposable income, the ability for the hospitality sector to rebuild its cashflow is heavily impacted.
It isn’t working
While hospitality businesses have gracefully abided by these restrictions and put the health and safety of Kiwis front of mind, many operators face impending closures. The solutions offered by the current Government to accrue more debt simply isn’t sustainable for the majority of operators.
For instance, with rent averaging 30% for accommodation businesses and over 10% for food and beverage service operators of outgoings across the industry, the wage subsidy barely scratched the surface of operational costs. Couple with the fact that in recent years, the sector has also seen increased fees, the introduction of complex regulations and poor Government policy, hospitality has been one of the biggest losers.
To overcome the challenging recovery ahead, it’s more important than ever that we strengthen cash flow, help consumers continue to support the local economy, and enable hospitality operators to continue ordering stock, paying fixed costs and running their businesses in this restricted environment.
The path to survive, revive and thrive
So, as the election approaches, Hospitality New Zealand has put forward our discussion document– Let’s Talk Hospitality 2020 – and identified the following key areas for the incoming Government to consider so hospitality has a fighting chance:
- Design and implement a targeted support package for the hospitality sector – in the form of a working capital grant, working with industry bodies to identify where the greatest needs are.
- Appoint a Minister of Hospitality – so the hospitality sector can be better understood and integrated into policy strategy.
- Conduct a regulatory review of hospitality – to improve regulations, ease compliance and give businesses a clear operating framework.
- Create a national framework for Short Term Rental Accommodation – to ensure a level playing field and regulated standards within the accommodation sector.
- Establish regulations around Freedom Camping – so local facilities and the environment aren’t overburdened.
- Invest in hospitality career pathways and training programmes – to fill the labour market skills shortage and ensure a vibrant future for the sector.
- Introduce a consistent and fair approach to the funding of core infrastructure – where the benefit principle applies, to ensure the sector isn’t unfairly targeted with new taxes or targeted rates.
- Adequately fund the Tourism Sustainability Commitment – to support and better incentivise all New Zealand businesses to implement sustainable practices.
- Understand and mitigate issues relating to Class-4 Gambling – working with the sector to uncover insights and find viable solutions to combat problem gambling.
The outlook for our sector remains bleak without additional Government assistance. We will inevitably have an influx of lay-offs and business closures across New Zealand’s once vibrant hospitality sector.
We understand that there is only so much money the Government has, but as an industry, we’ve pivoted countless times through the various alert levels, upskilled our teams, and where possible, created and implemented innovative cost-saving measures to adapt to the changing environment.
Hospitality lies at the heart of our communities and creates the vibrant atmosphere we all need and love – especially after times of difficulty. Our hope is that the incoming Government recognises the value of our industry and can help us survive, revive and thrive once again.
Wellness of people, with so many working from home – never has it been more important for Kiwis to visit their local hospitality venue, be social, get connected and check in on friends.
The latest GDP numbers 12% drop, support what we have been feeding into the Government, businesses are doing it tough. Only hindsight will tell if our elimination strategy was right, comparing to our Trans-Tasman friends in Australia whose economy fared better at drop of 7%. Treasury’s suggestion that the borders will not be fully opened until 2022 is concerning, not only do we need support we need to understand the game plan -this is the call from Hospitality NZ to the incoming Government.
