Covid 19 coronavirus: One in every two hospitality venues in tourist hotspots may never re-open their doors

Industry experts anticipate that one in every two hospitality venues in some parts of the country may never reopen following the lockdown and looming recession.

This is expected to be the case in Queenstown, Wanaka, Rotorua and Taupō - the major tourist centres, and there are grave concerns for the rest of the country.

Chris Small, managing director of ABC Business Sales, says only 50 per cent of hospitality venues in Queenstown and Wanaka are expected to be viable commercial operations at the conclusion of Covid-19.

Small, who says his business is the biggest buyer and seller of hospitality businesses across New Zealand, says he is in constant contact with hospitality operators and small businesses voicing similar concerns.

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"Sales reps are going to all of their suppliers asking how they are looking and what they are hearing is that one in two aren't even going to try reopening because they just can't see a future," Small told the Herald.

"In Christchurch, Wellington, areas outside of [tourist hubs], there's a feeling that 20-30 per cent of hospitality businesses may not reopen, especially if lockdown extends past four weeks and we start hitting eight weeks."

While banks are willing to loan capital to struggling operators, Small said the next three to four years for many businesses would be working to pay back the debt, an unattractive position for businesses.

"These people in hospitality make enough to make a living, but they don't have any access to pay back a couple of hundred thousand dollars," he said.

"It's in their interests to hand the keys back and say 'We're over' and then go down the road and start afresh - we're going to see quite a bit of that."

Marisa Bidois, chief executive of the Restaurant Association, agrees that one in two hospitality businesses in the tourist hotspots will likely not reopen once lockdown restrictions have been lifted.

The association anticipates about 21 per cent of the sector's 18,000 businesses will close permanently over the next 12 months.

"Queenstown is in a very dire space right now. I've spoken to a number of members in the area and it is not looking good," Bidois said.

Recent research from the Restaurant Association, conducted prior to lockdown, found that 30 per cent of hospitality operators had already restructured, 7 per cent had closed permanently and 16 per cent had closed temporarily.

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Looking ahead to the next 30 days, 57 per cent said they intended to restructure and 21 per cent would close permanently.

"We have 18,000 hospitality businesses in New Zealand, and we're picking that will be significantly less at the end of this period."

Hospitality businesses across the country were struggling, Bidois said.

"When you think about what our average profit margins are in the good times - between 3 to 4 per cent - the impact of having not nearly enough revenue coming through your business for a period of four to six weeks, and it's looking likely longer before we ever get back to normal, that will have a significant impact on our businesses' ability to recover."

"It's sad; it's definitely a hard time for our industry."

The association is optimistic that once lockdown restrictions are lifted, consumers will be itching to return to normality and resume spending and dining out.

"I think there will be a surge in people wanting to dine out again, that's a big part of our lifestyle and makes up the fabric of our community and New Zealand culture, so I feel confident that when we are back to what is normal, hopefully we will see more people wanting to dine out."

Longer-lasting restrictions on travel, however, will mean the sector will likely not return to how it was before the lockdown, she said.

"I don't think we will be back to what we were, but we will be better off than we are now."

COVID-19 UPDATE

GLOBAL STATUS

74,855,994

cases

42,277,369

recovered

1,659,941

deaths

2110

New Zealand cases

2034

recovered

25

deaths

Last updated: Fri 18th December at 12:17 am

Go here to see all our Covid-19 data

Last updated: Fri 18th December at 12:17 am

Go here to see all our Covid-19 data

Small said many tourism operators, including car rental companies, were in the same boat - contemplating shutting up shop permanently.

He expects thousands of businesses would shut up shop over the next three months.

Westpac has upgraded its unemployment forecast and now expects about 9 per cent of New Zealanders will be unemployed - double the current number. "Every tourism and hospitality business is going to be severely hurt. Tourism is [now] gone and for hospitality businesses in tourism meccas, many won't come back."

Hospitality alone employs more than 130,000 people.

• Covid19.govt.nz: The Government's official Covid-19 advisory website