Boom times for small tourism businesses come with a warning

Small tourism businesses are on a roll, according to a MYOB survey. Photo / Estelle Layshon

A survey of small and medium size tourism businesses shows 43 per cent of them reporting revenue growth over the past 12 months but are facing problems recruiting and retaining staff.

The MYOB Business Monitor survey shows this is well ahead of the SME average of 36 per cent.

For this calendar year tourism operators are expecting to do even better, with 46 per cent expecting revenue to rise - compared to the SME average of 38 per cent.

MYOB says the current quarter is looking particularly positive, with almost half (49 per cent) of all SME tourism operators saying they have more sales or bookings in the pipeline.

The survey of 1000 SME operators included 12 per cent in the tourism sector. The survey covers business owners and operators from sole traders to mid-sized businesses of 20 to 199 staff.

A Herald series this week has highlighted the financial spinoff from the tourism boom but also found the pressure to find workers and this is reflected in the survey.

The survey finds this is particularly the case in Queenstown and Auckland.

Rising house prices have made it harder for 28 per cent of tourism operators to recruit and retain staff, nearly twice the SME average.

MYOB general manager Carolyn Luey said this could put the brakes on growth.

"Many businesses may well be held back by how expensive it is becoming for staff to find accommodation - especially in key visitor markets like Queenstown and Auckland," she said.

Many workers in the sector can expect pay rises with a quarter of all tourism SMEs intending to increase the amount they pay their staff this year and nearly a fifth will be offering more fulltime roles.

Luey said 37 per cent of businesses expected increased competition and others were reporting growing pressure from increases in the cost of fuel, narrowing margins and the burden of compliance.

"What we are seeing here is a market that is doing very well, but needs to keep a close watch on the fundamentals in order to prevent costs and pressures from blowing out and affecting the bottom line."

She said there were also some fundamentals New Zealand needed to address as a country such as affordable accommodation for staff, labour shortages during seasonal peaks and the cost of compliance especially around health and safety and resource management.

"New Zealand has a fantastic industry in tourism, but we need to take a very careful look at how we are managing its growth and planning for the future."