Accommodation providers feel pinch as travel agents withhold on payments

Diana Arnold, owner of Havelock House BnB, is one of many business owners across Hawke's Bay and New Zealand who are still waiting on overseas tour agents to pay their bills. Photo / Warren Buckland

With tourism across New Zealand and Hawke's Bay already feeling the affect of Covid-19, some were feeling the impact of the virus weeks before the country went into lockdown.

Diana Arnold, owner of Havelock House BnB, is one of many business owners across Hawke's Bay and New Zealand who are still waiting on overseas tour agents to pay off their bills from previous bookings prior to lockdown.

"Many tourism businesses in the Hawke's Bay are waiting to be paid for bookings and services they provided to overseas guests in February this year," she said.

"We have provided the service, the guests have been and gone and yet we still haven't been paid.

She said that for many if these bills aren't paid it could spell the end for them post-lockdown.

"For many this could be the 'death knell' to their businesses," Arnold said.

"It is quite shameful that small businesses are being asked to take the knocks."

New Zealand has thousands of small businesses.

Many small accommodation businesses make up the Bed and Breakfast Association (BBANZ) and contribute to the economy by providing accommodation for domestic and international visitors.

Bed and breakfast operators have developed professional business partnerships with overseas travel agents (including inbound tour operators and wholesale travel companies) to supply accommodation to their clients.

These agents receive payment from potential travellers prior to their departure date, sometimes months in advance.

Much of the bed and breakfast business is operated on trust where bookings are confirmed and can be held up to two years in advance without payment.

In many cases payment is not made to the business until on or around the 20th of the month following the guests' departure.

Covid-19 has disrupted payments to bed and breakfast operators, resulting in many overdue debts.

"Thousands of dollars are outstanding," vice president of BBANZ Donna Brooke said.

Diana Arnold said that for many, if these bills aren't paid it could spell the end post-lockdown. Photo / Warren Buckland

"Covid-19, accounts payable staff shortages and traveller cancellations are the rationale given by some large multinational companies for non-payment.

"That is non-payment for services already provided and services that have already been paid for by the traveller prior to their stay.

"It's been a busy summer in New Zealand and tourism, like most of New Zealand, has reaped the rewards."

It's now autumn and the lack of reassurance from those owing money indicating when, or if, payments can be expected is extremely concerning to BBANZ.

The non-payment of overdue invoices has marginalised small businesses, putting many in great financial hardship and at risk of closure.

"It is unacceptable that some agents have been paid for services provided and are not passing that payment on to the operators who have incurred expenses and have met their contract obligations," Brooke said.

Arnold said that the impact these companies are causing on the tourist industry is just creating more pain then necessary and it is not just accommodation providers affected but many in the tourist industry in the region and across the country.

"There will be many businesses in the same boat and it's just not fair for them to have to deal with this added pressure during this situation that we are facing right now."