Hospitality NZ is hopeful, but doubtful, that the Government’s financial package announced on Monday will be enough to stave off closure for most venues and accommodation providers.
There are 21,000 hospitality venues in New Zealand, most down more than 40 per cent on revenue, and half told a survey last week that they won’t survive longer than three months.
The sector’s representative group estimates that the average combined pay out for the six weeks will be about $21,000 – equal only to average premises lease for the period and nothing else.
Hospitality NZ chief executive Julie White says that compared with the scale of the losses, the amount of money available is concerning.
"Right now, I have to say it looks like it will not be enough. Many will now close, or at best hibernate.
"Either way, it means job losses.
"The sector has compounded losses for two years and patronage been very low since the last lockdown.
"Many have exhausted all sources of private funds. Today they have certainty about the Government’s contribution. They can make their calculations and decide whether to continue," Julie says.
She welcomes the Government’s acknowledgement that the financial cost of the health response has been borne heavily by the hospitality sector.
"The package reflects a deep downturn under the Red settings, which have discouraged New Zealanders from travelling and going out."
She warns that eligibility criteria might hide significant issues: the package requires a 40 per cent revenue drop in Phase 2 compared to any week since January 1, but revenue for many businesses was already extraordinarily low during January.
"Some businesses never experienced a significant upturn in revenue after lockdown last year. Northland was in Red for a long time, and never got a chance to recover before the whole nation went into the Red setting. The public reacted very quickly to Omicron.
The Government has said it is continuously reviewing the economic impact of the health response, so Hospitality NZ says it plans to advocate for a second instalment next month.
