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By Hospitality NZ CEO Steve Armitage.
Later this week, the Government will announce its budget against a backdrop of swirling economic conditions here and abroad.
Hospitality, like all other sectors of New Zealand’s economy will be hoping to be featured on the government’s menu of policies.
Hospitality is the country’s seventh-largest employer and a $8.3 billion contributor to GDP. We too share the Government’s goal of growing our sector. Pre-budget indications are, however, that we should expect a budget which shows restraint.
The Prime Minister has indicated as much, saying that Budget 2025 will be built on ‘fiscal consolidation and economic growth’.
Hospitality and tourism are interlinked, complementing one another in the experiences they offer to visitors and locals, and also in the eyes of the Government of the day, which introduced a joint portfolio for both sectors when it came into office in 2023.
The Government has sent positive signals supporting tourism and hospitality this year, with increased support for Tourism New Zealand, regional tourism and business events through its Tourism Boost package, and changes to work-based learning so that sectors have more influence over how they train apprentices and trainees.
These are welcome, but hospitality is looking to Budget 2025 to turn pilot projects and one-off boosts into systemic, funded policy settings.
As we approach the Budget, Hospitality NZ believes there are three key ingredients we need to help turn the Government’s goal of growth into jobs, higher wages, and vibrant cities and towns across the motu.
The Government has already taken positive steps to turbo-charge events and tourism year-round. Our hope is that they double down on this support, topping up the business-events bid fund and ring-fencing multi-year money to attract visitors in off-peak travel seasons.
Hosting large-scale events like the Royal Edinburgh Military Tattoo, confirmed to take place in Auckland in February 2026, is vital for hospitality and accommodation businesses.
But business events are ideal shoulder-season boosters. Business-events visitors spend $175 more per person per day than leisure travellers, filling our hotels and restaurants when demand is soft, and typically running for more days than large one-off events.
Events are important, but so is getting locals out into our venues across the motu. To encourage more visits to our venues, we would also like to see the excise on alcohol lowered.
The beer, wine and spirits sectors are subject to an annual excise indexation, unlike most other sectors in New Zealand. Successive excise hikes are squeezing venues and customers alike: Excise on a 5 per cent strength beer 50 litre keg has jumped from $77.72, (2021) to $92.17 (2024) – around 47 per cent of the keg price once GST is added.
With every other cost line marching upward, we must pull excise back to a sustainable path so breweries and bars, and the jobs they sustain, can keep their doors open. Freezing CPI indexation in 2025/26 would be a welcome step, or mirroring the UK’s two-year freeze on excise increases in the UK, recognising the detrimental impact that excessive taxation can have on business.
In the long run we hope for a reduction in the tax on kegs which would enable hospitality businesses to lower their expenses. These measures enable competitiveness for on-premise venues and incentivise on-premise consumption of alcohol.
Finally, hospitality compliance requirements are increasingly complex, especially for smaller venues, and reducing the compliance burden is a consistent theme for hospitality businesses across the motu.
While in the long run we would welcome hospitality’s compliance requirements being reviewed as an industry by the Ministry of Regulation, streamlining processes and improving communication between regulatory bodies can significantly reduce the time and resources businesses need to spend on compliance.
Greater adoption of tools like Business Connect by regulatory agencies and local government reduces duplication, and clearer articulation of expectations and requirements also minimises what at times can feel like moving goalposts.
Allocating part of the Budget’s Regulatory Systems funding to expand Business Connect and align it with the HospoCred accreditation would give operators a single digital pathway for most licences and inspections. A modest investment could trim a portion of the sizable money – into the billions – a year that businesses currently spend meeting regulatory obligations, while maintaining protection for consumers.
Hospitality is ready to help lift the economy, if Budget 2025 locks in the right settings. By adopting the three practical measures we have set out – year-round business-events funding, a pause on excise indexation, and streamlined compliance – the Government will give bars, cafés, restaurants and accommodation providers the certainty to hire, train and invest with confidence.
This is not an exhaustive list; this is just three ideas of workable policy suggestions that can help venues thrive and drive regional growth across Aotearoa. If not these, we would like to see comparable support directed toward improving conditions for hospitality and accommodation businesses.
Hospitality NZ’s members stand ready to partner with Ministers and officials to translate proposals into action from Budget Day onwards. Back the sector now, and we will do the rest – creating jobs, growing wages and making our cities and towns vibrant places to live, work and visit.
