New Zealand

The impact of COVID-19 restrictions on New Zealand hospitality businesses

Case studies have revealed the dire effects of lockdowns on the industry.

New case studies released by Hospitality New Zealand have revealed the impacts of lockdowns on New Zealand hospitality businesses. 

As COVID-19 restrictions continue to pose challenges for tourism and hospitality operators, case studies show what Hospitality New Zealand CEO Julie White called a “very grim” situation. 

The personal accounts come as level 2.5 rules remain in many parts of New Zealand, limiting venue capacity and leading to ongoing revenue losses for many operators, some of whom are considering closing down if lockdowns and losses continue. 

One national chain of 18 hotels said that it had lost its usual December conference and event bookings following 18 months of losses. “We’ve had about $500k of bookings cancelled through to January,” said a spokesperson. 

In Auckland, which has been hit by some of New Zealand’s strictest COVID-19 restrictions, venue operators are citing major financial challenges as cancellations extend into November and beyond.

One bar owner said that a week of lockdown was equal to 10 weeks of lost revenue and that options needed to be considered with no word yet on when the latest restrictions will ease. Businesses are facing little to no income opportunities yet are still expected to fund operations, with no certainty or relief in sight. 

“We tried to remortgage our house,” one restauranteur said. “The bank refused because ‘You are in the hospitality industry.'” 

In Hamilton, the stories were similar. Restaurant owners said that they had just begun to recover from last year’s COVID-19 restrictions when new lockdowns began and that their businesses weren’t breaking even. Some operators have been turned down for wage subsidy payments and no longer have the funds to continue. 

“Our business was zero during lockdown,” said one restaurant owner. “And we cannot fit in enough people to run at break-even under 2.5.” 

At other venues across the country, case studies shared experiences of hardship, with businesses losing thousands, even millions, of dollars in revenue.

Owners have been forced to give up their savings to support their businesses, with even this not enough to sustain operations in the long-term. Many businesses are closing, and those that remain are struggling with both staff shortages and financial crisis. 

A common theme among the case studies was a lack of relief from landlords, with businesses increasingly unable to pay their bills. 

“How will we pay wages next week? How long will this go on for? Will I have to make staff redundant?” asked a Taranaki restaurant owner. 

Level 3 and 4 COVID-19 restrictions put a stop to all hospitality operations, but even at level 2, operators must run at a reduced capacity that many believe is simple unprofitable.

Some hospitality businesses are planning to halve their staff, saying that the government’s resurgence payments were only enough to cover one week of costs and that level changes meant that businesses could neither earn necessary income nor qualify for wage subsidies. 

“There will be no profit this year,” said a Wellington cafe owner. “I have to work in the business every day. Is this worth it?” 

Another operator said lockdowns had cost businesses all the money they had earned back since the last round of restrictions, with large amounts of stock going to waste every time COVID-19 restrictions were introduced. 

Accommodation businesses are facing challenges too, with operators stating that business just wasn’t returning this time, as travellers are growing reluctant to book holidays in advance. 

“We did well following the shock of the 2020 lockdown and enjoyed a good bounce-back,” said an accommodation business owner in Golden Bay. “But this time is difference. Occupancy is only 5 percent of normal.”

“Recovery after the last lockdown allowed us to put aside $280,000 earnings, anticipating more lockdowns,” said a Queenstown restauranteur. “We will burn through that $280k by the end of September.”

As COVID-19 restrictions continue for New Zealand, the nation’s hospitality sector is under threat, with operators and industry bodies alike calling for targeted government support.

It is hoped that additional support schemes coupled with further easing of restrictions can save many operators before it is too late. 

Other articles: 

Bad news for New Zealand hospitality crisis

New indoor limits for New Zealand hospitality venues

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