By Julie White, CEO of Hospitality New Zealand.

For many hospitality businesses, wages are often the costliest line item in running their businesses. The Government’s Wage Subsidy (and subsequent extension) during this time of uncertainty, was a lifeline for Kiwi business – keeping many in employment and ensuring some businesses could stay afloat, while they worked out how to operate under the new normal.

When the Wage Subsidy ceases on 1 September, it will be a huge blow to the hospitality industry. The sector has been one of the industries hit hardest by the pandemic and has already suffered huge losses. During Alert Level 4, 60% of Hospitality New Zealand members surveyed said they would make 30% of their employees redundant. Our most recent survey at the end of June has 30% of Hospitality New Zealand members potentially laying off another 20% of their employees. 

We are confident that viable hospitality businesses will be able to return to profitable trade in the future, but the harsh reality is, businesses will still be looking to make more people redundant. If they haven’t already begun the process, many will be forced to start if no further support is provided. Over the last eight weeks, Hospitality New Zealand has received approximately 600 calls from our members, asking for information and assistance with restructure and redundancy.

We aren’t asking for a free handout and understand there’s only so much money the Government has, but we need to ensure the survival of our industry – at least through to the peak Summer season, especially with international tourism grinding to a halt. Pre-COVID, the hospitality industry brought in $11 billion to the economy and employed 170,000 people. While borders are closed, we have to look inwardly for the tourism dollar, and relying on domestic tourism to plug this significant gap is a tall order.

We desperately need an industry targeted relief package and the extension of the Government Wage Subsidy is one measure to do this. The United Kingdom has done an excellent job getting behind hospitality businesses by refunding half of their Value Added Tax (VAT). New Zealand could follow their lead and implement this initiative to keep businesses open, keep Kiwis employed and pass savings onto customers.

Many of our members have upskilled themselves and their employees where possible, implemented innovative cost-saving measures where available and adapted to the changing environment to ensure their survival. They’ve focused on upselling for table service but also have pivoted to source ancillary revenue through ‘Click-n-Collect’ and contactless delivery options.

We are in a people-led industry. Customer service is at our core and we need people in our businesses to be able to keep our doors open. Hospitality plays a critical role in New Zealand’s cultural fabric, economy and tourism industry and it’s important that as many of our businesses can recover from the impact of COVID-19 and be here for Kiwis for years to come.

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5 Comments

  1. I agree and support the sentiment. The Wage Sub Ext was welcomed but a little too late as under Employment Law a proposal must be presented to staff, individual consultation meetings and sufficient time for feedback. We commenced this process 6 weeks prior to Govt Wage Sub finishing as this provided time for the process as well as staff notice period. The Wage Ext was announced too late as we would have retained some staff we reluctantly let go. Premise rent for many accommodation providers considerably exceeds wage cost and the Govt failed in this area. Australian Govt provided clear guidelines on commercial tenancies under Covid however our Govt has applied $20m towards arbitration costs (to solicitors) that indicates they don’t know how to solve this (money isn’t always the solution) whereas the Australian Govt solved without the $20m price tag. To keep jobs, you first need to keep businesses and this appears to have been underestimated by Govt.

  2. What we have foudn the hardest is thr 40% to get the wage subsidy, as people were rapt to have the pub open again but that died off, but it now has become, do we push and push and push behind exhaustion to get more people in or do we die so we can qualify for the current wage subsidy. It is killing us.

  3. * Find our pub in the situation that we are open and trading at 30 % down on last year so we do not quaify for the second round of the subsidy but the hotels around our area are not operating with hours the same as last year so will get the subsidy, totally unfair situation. we are being penalised for trying.

  4. Accommodation providers in smaller tourist towns like Taupo, Northland, Te Anau and Wanaka are being hit hard, we are competing with AirBnB’s, and are up against the advertising of places like Queenstown & Rotorua, which we are told are near capacity. We are significantly down, school holidays have helped but not enough to keep the wolf from the door. We desperately need the wage subsidy to continue to operate – with high rents and commercial rates, we can’t compete with the likes of AirBnB’s. Its a good likelihood there won’t be small accommodation providers going forward – we need a level playing field.

  5. Nationally we are trading at an average of 30% occupancy which is less than half of pre covid levels
    Government intervention and legislation around commercial rents is our key to survival
    This seems to have slipped off the radar ?

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