New Zealand

“Beyond grim” reality as NZ providers hit single digit occupancy

Not unexpectedly we have had 30 percent of our already impacted August business cancel since the lockdown announcement. September bookings have also been affected and reservations have dried up completely,” said Mark Rose, Chief Executive of The Rees Hotel in Queenstown.

Mass cancellations are devastating Accom providers across New Zealand thanks to the new wave of COVID-19

It’s a punch in the gut to an already decimated sector. The industry, once thriving, is reaching the end of the road with Auckland on Alert Level 3 lockdown and the rest of New Zealand on Alert Level 2. Accommodation providers and operators are feeling the brunt of cancellations across both the North and South Island.

One regional Accom in the South did have more positive news for us. Shelley McGonigle from boutique hotel, Poshtel Oamaru said: “Luckily the south islanders seem to be moving around as well so we haven’t had that many cancellations.”

According to New Zealand Hotel Owners Association (NZHOA) Executive Director Amy Robens, hotels up and down the country are fielding calls from thousands of domestic and corporate travellers cancelling their accommodation.

Amy described the latest impacts on the struggling sector as “beyond grim” and the ongoing repercussions seemingly endless.

Auckland is a big market for hoteliers throughout New Zealand when there is no international visitation and booking cancellations for domestic leisure and conferences, even just through to the end of August, is costing the struggling hotel sector many millions of dollars.

“While we support the Government’s decisive action to tackle Covid-19 community transmission, urgent financial relief including a targeted extension to the wage subsidy must go beyond Auckland with hotels throughout the country feeling the full impacts of the region’s Level 3 lockdown.”

“Hotels are particularly hard hit by enforced lockdowns given they can’t re-open quickly and profitably in the same way as many other businesses. Hotels need to generate enough forward bookings to make their business viable, and given we are losing bookings many will return to single-digit occupancy.

“Hotels typically lose money unless they reach at least 70 per cent occupancy. Accommodation providers feel we have been side-stepped in the Government’s $400 Tourism Recovery Package. Now is the time to support the sector by allocating some of the $14 billion dollars from the Covid Response and Recovery Fund.

“At its peak the hotel sector employed 20,000 people. Our workforce has more than halved and will likely continue to decline. With record low occupancies, low margins and virtually no profit, the situation is beyond dire.”

“Any extension to the current lockdown status will see the moderate level of business hotels are experiencing wash completely. We are at the end of the road,” Amy Robens said.

Hotels in areas such as the West Coast of the South Island, in particular South Westland, Bay of Islands and Southland/Fiordland, are especially struggling and have either been mothballed or are running with low single-digit occupancies.

David Ovendale CEO Top 10 Holiday Parks Group last week told us the effects of this lockdown are “pretty devastating”. The news of another lockdown came just as the industry was getting back on its feet after a solid July and August.

David revealed: “This is going to put us on the back foot again. We have been handling high volumes of cancellation/refund requests today and forward bookings are down on the daily volumes we have seen recently. We are certainly all hoping the numbers stay low and we will get on top of things quickly but only time will tell. On the up side, we have done it before so know the drill.”

On Friday the PM Jacinda Ardern announced the decision to extend the restrictions for a further 12 days, it’s a precautionary measure in line with and New Zealand’s philosophy of going hard and going early”.

She said that, in 12 days’ time, she thought “the cluster will be identified, will be isolated, and we can move to Level 2 in Auckland with confidence”. The wage subsidy has also been extended.

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