Friday, June 14, 2024
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Non-payment puts small businesses in hardship

There is a lot of goodwill within the small businesses of Bed & Breakfast Association New Zealand.

What happens when that goodwill is challenged and under threat?

Zealand has thousands of small businesses keeping the economy at a reasonably healthy level. Small businesses make up Bed & Breakfast Association membership, who contribute to the economy by providing accommodation for domestic and international visitors.

Many 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 travel departure date, sometimes months in advance. Much of 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 guest’s departure.

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

“Thousands of dollars are outstanding”, says Donna Brooke, vice president of BBANZ.

“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.

Tourism, and 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.

Tourism and guests will return. Bed and breakfast accommodation will remain a viable option for national and international guests.

However those travel agents, inbound tour operators and wholesalers who have yet to pay their overdue invoices need to pay up before they irreparably damage the goodwill built up in previous years. Build that goodwill and work together to get New Zealand tourism on track again.

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