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.