Matt McLaughlin, owner of bar Panhead. Photo / Supplied
Matt McLaughlin, owner of bar Panhead. Photo / Supplied
New Zealand's hospitality sector faces a long, tough winter as the realities brought about by the Covid-19 pandemic and muted spending bite.
Matt McLaughlin, owner of Wellington bars Panhead and Danger Danger, and Wellington president of Hospitality NZ, says the outlook for hospitality is "grim" and simply being open totrade will not be enough to keep some in business in the months to come.
Bars tonight open their doors to the public for the first time after eight weeks. The next two months will be tough but the following six months will be the hardest, says McLaughlin.
An initial "honeymoon" period of increased spending is expected over the next few weeks, but McLaughlin warns that revenue from Kiwis excited to get out to their local hospitality venue won't cover losses endured over the past two months.
"We're going into a greatly reduced market; it's really worrying," McLaughlin told the Herald.
"We have no tourism. There's no events on, there's no shows, we're not getting the pre-show bookings for dinner and we're not getting that second wave of people coming in during normal dinner service. The market is squeezed and it's going to be a tough winter."
A survey conducted by the Restaurant Association found that more than 45 per cent of its members had experienced significantly reduced revenues since re-opening their doors.
Just 3.5 per cent of members said their turnover was similar to levels prior to Covid-19.
Restaurant Association chief executive Marisa Bidois said additional financial support, mentoring and marketing would be important for the industry as it rebuilds.
The association has created a recovery taskforce and is focusing on training and mentoring operators to help business recover over the two years.
Bidois said hospitality businesses needed a lump sum cash injection to assist with overheads, lease assistance and wage subsidy extensions to be granted to those with 30 per cent losses instead of the outlined 50 per cent, to get through the crisis.
How fast hospitality and other sectors of the economy recover will depend largely on how fast the borders open up for international tourism.
A transtasman "travel bubble" was the only hope for a swift recovery, McLaughlin said.
"It'll be a massive benefit to us. Will it pull back every tourist that usually comes to New Zealand? Probably not, but it will go a long way to filling that [spending] gap."
Matt McLaughlin, owner of bar Panhead. Photo / Supplied
Sporting events hosted in New Zealand and Australia and other entertainment events would also be a good way to encourage visitors to the country, and spending, he said.
"Until we've got the transtasman bubble as a minimum, because a big part of hospitality is international tourists, our businesses are going to struggle. A lot of businesses won't survive - we know that."
Beverage giants DB Breweries and Lion are leading marketing campaigns to get Kiwis spending at their local venues again. DB has launched Back Your Bar, and Lion has today launched its Cheers to Your Local campaign to support the industry as it adjusts to life in level 2, giving hospitality businesses access to a social media toolkit they can use to market their own businesses.
Even if New Zealanders resumed their usual hospitality spending, the reality is the industry is unable to thrive without the dollar of international tourists, McLaughlin said.
The next 18 months for businesses will be about survival, and many will not turn a profit, he said. He is hopeful for a much better summer if events are able to resume.
It was unrealistic to expect to experience pre-Covid levels of spending in the industry in the months ahead.
The industry was "at least five years" away from recovery and back to what it was, he said.
"Even if New Zealand is in a much better position than a lot of other places around the world, still about 30 per cent of our revenue is from international tourists. [Realistically], it's going to be five years before we get all of those cruise ships back, five years before we get big groups of international tourists coming back to New Zealand as they were."
It would be at least two years until most hospitality operators were viable again, he said.
"There's the likes of myself who have invested 20 years of my life into my business and I would hate for those 20 years to be flushed down the toilet and my businesses not to survive because of the virus.
"For people who have their mortgages and house attached to their business, there's going to be a lot of hurt."
McLaughlin said he did not know of any venue that had not been affected by the virus.
He said Covid-19 and the disruptive it had caused still blew his mind: "The world has been stopped by this virus - it still blows me away".
There is concern that some Kiwis were understandably too nervous to come into a on-premise environment, but McLaughlin said bars and other hospitality venues were following Ministry of Health guidelines, ensuring guests were spaced out and seated and one staffer tended to one table.
"[We're] pushing the word out on the street that we're back open and love and need all of our customers to come back and come into our venues."
Government "separated, seated and single server" guidelines meant that many venues were operating at half capacity, in some cases less, which was also having a financial impact on operators.
The industry needed rent relief or other financial support outside of the wage subsidy, McLaughlin said.
Hospitality NZ had already lobbied for more relief for the sector, without any success.
The industry body had also pushed for on-license venues to be granted off-license passes so that they could send alcoholic drinks with takeaway orders as a way of generating more revenue. This was also unsuccessful, along with requests for rent relief and help to barter with landlords.
