Sarah Meadows and husband Matt Young own Wanderlust NZ in the Bay of Plenty. Photo / Supplied
Accommodation operators in the youth tourism market are bleeding badly financially and some are beyond tipping point.
The sector, worth at least $1.5 billion a year before Covid, is backing a leading tourism group's bid to demand more clarity from the Government on the milestones needed for the staged re-opening of the country. They say more targeted help is needed for hostels.
About a third of hostels had closed or were in hibernation and those that remained in business had seen weak domestic demand slump even further after the lockdowns that followed the Delta outbreak.
Young, crisis-resilient travellers are expected to be among the first to return to New Zealand when they can, but there are fears that there will be far fewer accommodation options when they get here.
The Backpacker Youth and Adventure Tourism Association (BYATA) is backing the Tourism Export Council's urgent plea for more details of a timeline - work they say can be done without being derailed by the Covid outbreak.
Tourism Minister Stuart Nash referred the Herald back to a speech by Prime Minister Jacinda Ardern on August 12, when she committed to open up in stages some time "from" the first quarter of next year. She outlined opening on risk-based principles for a phased return of quarantine-free travel - at about the same time as Delta was spreading into the community, with just 21.2 per cent of the population fully vaccinated.
Asked on Wednesday about the plight of the businesses within the sector Nash said (nearly 48 hours later) : ''This is a difficult time for the tourism industry and the accommodation sector. I acknowledge the challenges the sector is facing as a result of both Covid-19 alert levels and international border restrictions, both of which are required to keep New Zealanders safe.''
He said the arrival of the Delta strain had highlighted uncertainty for businesses and communities.
The 'Reconnecting New Zealanders to the World' plan unveiled in August provided an idea of what border settings ''might'' look like next year, the minister said.
Sarah Meadows and husband Matt Young own Wanderlust NZ, a Qualmark five-star hostel on the waterfront in Tauranga with 114 beds; and Pacific Coast Lodge and Backpackers in Mount Maunganui, a four-star hostel with 96 beds.
Before Covid, both were very successful businesses. But when borders closed, 75 per cent of the market disappeared, so the couple concentrated on the domestic market. However, that could never fill the gap, and then even that small market essentially dried up with Auckland in lockdown.
"In September we had many group bookings and were looking to have some light at the end of another very hard winter. We went from 90 per cent booked to 20 per cent. October bookings have mostly gone as well," said Meadows.
The cancellation of the Bay Dreams 2022 festival is the latest blow.
"The adventure youth tourism market is bleeding, many hostels have closed, hibernated or are for sale. This is changing the tourism landscape."
The couple were doing all they could to keep staff in the business and reassure them. But border-facing businesses throughout the country needed more help, especially those family operations that missed out on Government support that went to big firms with deep pockets.
"Tourism needs more targeted assistance so we can continue to employ our staff and remain open when the borders open; wage subsidies and the resurgence fund does not help with rent and all the outgoings ... it's a drop in the bucket when a $24,000 insurance bill arrives," said Meadows.
The surprisingly good macroeconomic news and positive data trumpeted by pundits and politicians was cold comfort for those who are having to re-mortgage their homes to survive in business.
Nash said support for business would remain broard.
''Because of the inherent uncertainty of the pandemic and the need to act in a timely manner, the government maintains a preference for broad-based support for all businesses.''
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"The mental health status of tourism operators, it's just horrific. We are struggling and no one is listening," said Meadows. "People are losing their houses, their life savings - I just don't think that's fair."
In Auckland, Michael LeRoy-Dyson has owned The Attic, a popular backpackers that opened in 2013, and was 95 per cent full just before borders closed in March last year. Now average occupancy is 12 per cent and the business is bleeding during the city's prolonged lockdown.
He says he's exhausted a $200,000 contingency fund he had built up, is tapping into his own savings, and borrowing from family and friends.
Throughout the pandemic he has constantly found his predicament getting worse, just when he didn't think that was possible.
He's gone from having a business that comfortably fed his family to one that would cost him more to close than keep running, with staff numbers going from 12 to one. LeRoy-Dyson accepts the challenge the Government faces trying to set targets, let alone fix dates for re-opening, but wishes it would do more to level the playing field on commercial leases, acknowledge the role of the backpacker market, and provide more support.
Auckland had been particularly hard hit by being the country's main gateway. He says some among the "team of 5 million" have done it tougher financially than others and it is smaller businesses that are most at risk.
Tipped out of bed
•Average daily hostel beds in NZ for 2019 – 27,266
•Number of hostel beds in NZ, June 2020 – 18,680
•Number of hostel beds in NZ, Aug 2021 – 15,310
- Stats NZ, Accommodation Data Programme
Besides staying longer than other tourists, spending more in the regions and acting as great ambassadors for the country, backpackers also fill another important role - providing workers in horticulture and hospitality. Hostel owners want to see plans for how a working holiday visa regime will be reinstated.
Soon after becoming Tourism Minister last year, Nash raised doubts about the value of the backpacker market compared to high-end travellers.
(And in a sign of how dramatically Covid's impact can change, in the same RNZ interview he said people in other parts of the world under lockdown would be looking enviously at New Zealand, a "piece of paradise", and at unmasked Kiwis packing rugby grounds.)
Brett Duncan, a BYATA board member and hostel owner in Queenstown, said the minister appeared to have changed his view on the value of the youth market, but his association had not had much feedback on calls for more guidance from the Government.
"The industry is in turmoil," he said, and closures were happening quite quickly.
It was important to keep hostels open as they could be the first places to be in demand from younger travellers less worried about travelling during a pandemic. Because they spend longer here than many other travellers, they will not necessarily be so worried about higher airfares and any additional costs for Covid testing as these could be spread out over a longer time, said Duncan.
It would be close to three years of delayed overseas experience for many and they would be keen to come here.
"So we expect that they'll come pretty fast," said Duncan
The backpacker industry in New Zealand is made up largely of small operators; the average hostel size in New Zealand is only about 60 beds.
"We're largely a nation of small, high-quality, independent owner-run hostels - there is a lot of heart and soul has gone in. And of course, we've seen a lot of casualties."
Nash said the wage subsidy and the resurgence payment were the primary means of business support, but are not the only support available. Other financial support includes concessionary interest-free loans under the small business cashflow loan scheme and lump sum payments under the leave support scheme and short term absence payment.
Although the Government has faced criticism from health experts for the timing of moving Auckland down from alert level 4, he said: ''I reiterate that the health-based response remains our best economic response.''
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