The move to level 2 on Thursday will come too late for some in tourism and travel with the hotel sector badly hit by months of plummeting or no business at all.
Business confidence among New Zealand's hard-hit hotel sector is much bleaker than
business confidence in general while an association representing owners says they need a hand-up, not a hand-out from the Government to get up off the floor.
Hotel Owners Association executive director Amy Robbens said while the move to level 2 was positive news for hotel owners the sector didn't expect to see domestic travel - now the only source of guests - return to pre-Covid-19 levels.
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'With so many people out of work, and with little to no discretionary spend – it's not simply a case of allowing domestic travel and then seeing it return to previous levels – not in this new norm,'' she said.
Tourism Industry Aotearoa chief executive Chris Roberts welcomed the move to level 2 for most businesses from Thursday but said the delay opening bars and restrict gatherings to fewer than 10 people would push more businesses over the cliff.
The New Zealand Hotel Market Sentiment Survey by Horwath HTL and TIA showed 40 per cent of 115 hoteliers had shut down due to travel restrictions from Covid-19.
With little prospect of New Zealand's borders opening to international visitors any time soon, the outlook for the next two years is bleak.
The survey found 73 per cent of respondents expect that trading conditions for their
hotel in 24 months' time will have deteriorated compared to 2019.
"These results come at a time when hotels reported an average occupancy of 14 per cent in April. The survey found that 68 per cent of hotels in regional areas are fully closed,'' said Horwath HTL director Wim Ruepert.
Auckland, where some hotels are being used for quarantine purposes, 20 per cent of hotels are closed. Only 11 per cent of Queenstown hotels are fully operational with 58 per cent fully closed.
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The impact of the pandemic on hotel employees is extremely high with most hotels
expecting heavy redundancies when the Government's wage subsidy scheme ends in
Overall, hoteliers expect to reduce the number of employees by an average of 56 per cent. Job losses in the main visitor destinations are expected to be higher, from 69 per cent for
Queenstown hotels to 89 per cent for hotels on the West Coast.
Nearly 70 per cent of hotels expect to make a cash-loss in 2020 and TIA says they want
ongoing financial assistance from the Government, including a significant
budget increase to provide Tourism New Zealand with the required resources to help fill
Robbens said the move to level 2 was the first sign that things could moving again for our tourism sector.
''Now is the time for Kiwis to explore their backyard, support tourism and help our economy get back on its feet.''
Her association was wanted to work closely with the airlines around their domestic flight schedules and capacity, so hotels across New Zealand can get a good gauge on potential guest flow. Air New Zealand announced it would further boost its domestic flight schedule with seven more routes restored on top of those announced on Friday.
While hotels in Queenstown in particular had few or no guests they needed to keep running to protect the buildings. The heating bill for one large Queenstown hotel was $45,000 a month.
Major hotels in New Zealand have a total capital value of around $10 billion.
"We also have significant supply costs. For example the heating bill for one QT 250-room hotel is $45,000 per month."
The hotel sector has been decimated and was in survival mode, and in the budget was seeking a "hand-up" not a "hand-out'" from government in the form of targeted financial relief, she said.
•Targeted wage subsidy - a six-month extension to the wage subsidy scheme.
• Redundancy financing – an interest free loan payable over a three to five-year period with no capital payments in the first 12 months.
• Taxation relief- suspension of all provisional tax instalments until the third or terminal tax dates.
• Local government rates grant – a central government rates grant to the hotel owners for the next 12 months.
• Local government rates reduction/rates freeze – These rates run into the hundreds of millions of dollars.