Bay of Plenty businesses are working to balance the books as costs increase and staff shortages hit. Photo / Getty Images
Tourism and hospitality businesses are balancing their books as increased costs and staff shortages hit both their and customers' pockets.
Oscar and Otto co-owner Catherine MacLoughlin was in the process of updating its menu prices.
With the combination of wage increases and the cost of goods rising about 10 per cent, she said it needed to be reflected in the price.
The business had been impacted by a worker shortage in "almost every area", with the latest vacancy of a dishwasher being open for a month without a single inquiry.
"It's an unworkable situation."
Before the pandemic, she said backpackers made up about 30 per cent of its staff, and so hearing the border news had been good.
Ash Gee of Miss Gee's Bar & Eatery was also working with less than adequate staffing numbers.
She herself was working almost fulltime on the floor, which meant admin had been put off.
"It's pretty much been impossible, super hard."
There was high competition in the job pool and the long hours, exacerbated by the staff shortage, meant people were leaving hospitality, she said,
Gee said it was unfortunate that the compounded impact of inflation, the cost of goods and wage increases would need to be absorbed by the customer, in part.
Just last week the price of a bag of cheese had risen by $10.
She said businesses, including her own, were looking to broaden offerings and diversify.
CBK Craft Bar Kitchen Tauranga owner Billy Emeny said it had been a tricky time and he could not find staff to hire.
But to combat this he implemented a digital menu where customers ordered their food and drink from their tables.
It had been running for about two weeks and he said feedback had been "through the roof".
"It's definitely sped things up."
A Tauranga Business Chamber spokesperson explained it was a case of peak demand during a period of artificially restricted resources over the past two years, particularly relating to supply chain issues, border closures and Covid-19 restrictions.
The impact was that local and central governments had increased their investments, creating intense competition for a constrained labour market.
The Government this week announced a number of changes to New Zealand's border, immigration and visa settings.
This included fully reopening the border in July instead of October, as well as to cruise ships. There were also new sector-specific agreements – including for the seasonal snow and adventure tourism sector – aimed to help industries transition from a reliance on low-wage, low skill migrant labour.
All work visa categories, including the new Accredited Employer Work Visa, will be open for applications by July 4 and applications for student and visitor visas will reopen July 31.
The spokesperson said opening the borders was a way to help ease the situation, and not just by high-value immigrant workers but with backpackers too.
The situation at present meant employees have the dominant negotiating position as it was difficult to find good staff, they said.
Staff wages will "inevitably increase" as some employers counter-offer to keep employees who may have been attracted to other jobs with higher pay.
Consequently, businesses will need to absorb the cost.
"Consumers will be tightening their belts and will not be prepared to pay higher prices when their mortgages and rents are also increasing.
"The economy will cool down considerably over the next 18 months, particularly for those sectors that rely on discretionary consumer spending."
But Tourism Bay of Plenty did not think businesses would be able to absorb those costs themselves as it was "highly unsustainable".
General manager Oscar Nathan said he had noticed a lot more 'staff wanted' signs popping up in store windows across the region, and its Flavours of Plenty initiative gave insight into the pressure many hospitality businesses were facing.
"Some of our accommodation providers are probably also experiencing staffing issues, but it's difficult to know if this is due to Covid-19 isolation rules or a lack of incoming staff."
He was sure many tourism businesses were feeling the strain due to increases in CPI and inflation, which drove up costs and put pressure on attracting and retaining staff.
Nathan said employees were seeking increased wages as the cost of living rose.
"These additional costs will either have to be absorbed by the business, which is highly unsustainable, or they will have to be partially or fully passed on to consumers and visitors."
A silver lining for the staffing situation was that the region had entered the shoulder visitor season: "While international visitors are now starting to trickle in, we expect local tourism operators won't really need to boost staff numbers until later in the year."
This week's border announcements were imperative and will greatly assist these operators with their forward planning, he said.
Most coastal Bay of Plenty tourism businesses maintained normal staffing levels to cater for domestic visitors or have downsized or hibernated while New Zealand's international border was shut, he said.
"Work is being done to encourage people to study tourism, showing potential workers the diverse range of opportunities that our industry has to offer."
As for international visitors in the bay, the numbers have been steadily rising since March. Nathan said this may be due to repatriating Kiwis showing as international visitors in the data.
Statistics show that on average 1300 international visitors a day have been spending time in the coastal Bay of Plenty since the international border began reopening on April 13, initially just to Australian travellers.
That was about 400 more a day than what it received in the month prior.
These initial visitors were believed to mostly be those visiting family and friends.
"However, these numbers are giving everyone a glimmer of hope for the higher international visitor numbers we're expecting to see in our region later this year, in spring and summer."
He said the tourism sector was working hard to "use the reset time" the pandemic had forced upon it to pursue sustainability goals.
"We can see how paying higher wage rates will help raise the profile of tourism as a viable career, which will be good for our sector, and they will, in turn, provide a better quality of life for everyone who depends on those wages."
But there was a risk this would further exacerbate the inflationary cycle, he said.
Tourism Bay of Plenty Flavours of Plenty chair Stacey Jones said the general consensus with hospitality providers was that there was a "definite staff shortage".
Many restaurants were recruiting for front of house staff and chefs simultaneously, with more than one role available in each area.
"Owners feel the pay increase is fair but badly timed, and the skills being offered don't always match the increased pay requirement."
But the impact went beyond finances. Jones said mental health was a real challenge for many providers at the moment, as they worked long hours and were not getting much of a break as they cover the shortages.
"It does seem things are picking up, but if you don't have the staff or skills to match the demand you have to turn people away, and this is something which many of our venues have had to do."