Covid-19: Far North tourism businesses consider hibernation as bookings fall up to 90pc

Duke of Marlborough owners Anton Haagh and Riki Kinnaird, with their wives Bridget Haagh and Jayne Shirley, are worried that summer trade will be devastating for the Far North. Photo/ Jess Burges

Far North tourism operators have hit "rock bottom" as holidaymakers stay away from New Zealand's only red-zoned region, leading businesses to consider summer hibernation.

Business owners in the Far North are getting increasingly desperate as visitor numbers continue to plummet under the red traffic light, cancelled events and uncertainty around the checkpoints and vaccination numbers.

The Bay of Islands Marketing Group, an organisation established by local businesses to market the area, has gathered input from Mid and Far North tourism businesses in response to Far North Mayor John Carter's request for a prognosis for the 2021/22 summer season and it paints a woeful picture.

Responses show revenue forecasts are down by between 50 to 90 per cent year on year.

Fourteen businesses from Paihia, Russell and Kerikeri reported that their current bookings from December 2021 to March 2022 are down by at least 60 per cent – some stated a 90 per cent decrease.

In Kaikohe, Hokianga and the Doubtless Bay area the outlook is similar: businesses are considering hibernating because the outlook is dire.

The Duke of Marlborough in Russell is one of many Far North businesses that have been hit hard since Covid. Photo / Michael Cunningham

"We are at rock bottom in staff numbers now so I don't think we will be laying anyone off as such," one business commented as part of the survey.

"The hard job is working out whether we employ more people for the summer with no confidence in the market. We support six families. I loathe employing people with the possibility of needing to get rid of them later in the summer."

Another business owner said: "We are considering mothballing the business, that would impact nine families, and I don't know how they would manage, so we are holding on for grim death to prevent job losses."

One business that is usually fully booked over the holidays and Waitangi Day is down 80 per cent in bookings for Christmas and New Year's and 50 per cent for February.

Their forecasting shows a 70 per cent loss in revenue.

"We are expecting many businesses to be closed if this summer goes the way it is looking. Watching and listening to news reports I feel holiday travellers are feeling not wanted in Northland."

Many report that their regular guests would holiday in other regions because they don't feel welcome in Northland.

The region was perceived by potential customers as "too difficult", with "bucketloads" of cancellations arising from the fact the region is in red and the national discussion around blockades on roads leading to the North.

"Northland is far enough away without the risk of potential delays caused by blockades, and after two years of Covid who wants to head for their summer break into a more restricted environment than the one they're currently in?" Riki Kinnaird, chairman of the Bay of Islands Marketing Group and co-owner of the Duke of Marlborough Hotel in Russell, said.

Hospitality has not only lost travellers from other regions but also some of their local guests, who are not able to go to bars and cafes without a vaccine passport.

Events to commemorate Waitangi Day at the Treaty Grounds in February next year have been cancelled. Photo / Michael Cunningham

Christmas parties, festivals and other entertainment events were cancelled for this year and early next year.

In addition, restaurants increasingly report hostility towards their staff when they are enforcing vaccine mandate rules.

The Bay of Islands Marketing Group says the financial burden for business owners and their staff has detrimental effects on their mental health.

The Duke of Marlborough, together with Northland Inc, commissioned economics consultancy form Infometrics to provide a prognosis for the region's tourism sector.

Infometrics said the hit from the Delta outbreak restrictions is clearly noticeable, with spending between August and October being substantially weaker, representing a 10 per cent drop compared to 2019.

Brad Olsen, principal economist for Infometrics, is from Whangārei. Photo / Jenny Ling

"August to October was when the hit from the Delta outbreak restrictions kicked in and Northland was isolated from the rest of the country, effectively 'islanded' by a locked-down Auckland," Kinnaird said.

During the Delta lockdown, sales in alcohol, food (14 per cent) and other retail went up while tourism, fuel (20 per cent), food and beverage services, recreational services (45 per cent), accommodation (50 per cent) and passenger transport (78 per cent) lost significant income.

"The Infometrics data for this period provides just a taste of what our members are telling us and substantiates what our business community has been telling us: the Northland region has been hit hard by our isolation," Kinnaird said.

Infometrics also looked at three scenarios for the future tourism development in the region based on total annual visitor arrivals into New Zealand over the year to December 2019 – pre-pandemic.

Their high scenario assumes that tourism arrivals rise to 110 per cent of pre-pandemic levels by mid 2026.

The central scenario looks at around 82 per cent by 2024, and 93 per cent by mid-2026 and the low scenario sees the tourism arrivals rise back to 60 per cent of pre-pandemic levels by mid-2026, including a slower start to tourism arrivals in the near term.

The central scenario sees tourism restart from 2022, with a slow but building revival in international tourism arrivals.

Infometrics expect tourist arrivals to initially recover slowly but will begin to take off as global health and economic conditions return to normal.

The Tall Ships race in Russell which usually runs in January has been cancelled for 2022 which will further reduce visitor numbers. Photo / Tui Allen

"Travel is expected to remain below pre-pandemic levels due to higher inflation and weaker economic outcomes internationally, a lack of capacity in the aviation sector, and possible changes to behaviour and increased hesitancy of travellers," the report states.

Their forecast assumes that international borders will open in April 2022 with a seven-day self-isolation period for inbound travellers. It doesn't account for changes to the border settings because of Omicron.

In 2019, international tourists spent $247 million in Northland, with a further $860m coming from domestic tourists.

While Kiwi holidaymakers are expected to put more into the regional economy this year – around $920m – international spending is down to $16m-$18m.

By 2025, annual international tourism spending is estimated to range between $147m-$271m.

Under all scenarios, this and next year would be the worst in total tourism spending.

Infometrics principal economist Brad Olsen said there was no sugar-coating the severity of the situation.

"The outlook is incredibly uncertain and challenging for businesses."

There was some silver lining, however: Olsen said the summer of 2020 had shown a huge uptake in domestic tourism – especially for Northland – and while the region was far from seeing similar visitor numbers this season, it showcased that Northland was considered a popular destination amongst Kiwis.