New Zealand

Heartbreaking! NZ hospitality industry is broken

Financial support critical as survey reveals 58% of businesses face insolvency

A new Hospitality New Zealand (HNZ) survey reveals close on 60 per cent of the country’s hospitality businesses are preparing for insolvency within the next three months.

And HNZ believes the figure could go even higher as Omicron takes cases continue to grow.

The survey of 400 members instigated at the start of February reveals that business is at least as bad as any other time during the COVID-19 crisis.

A further survey polling 600 members conducted mid-month showed that half the industry has recorded a loss in turnover of 40 percent or more since the shift to the Red setting.

Hospitality NZ CEO Julie White says the only thing that will save half of hospitality is Government financial assistance by the end of this month.

“We’ve got through two hard years, but it’s unlikely many will make it through the next two or three months of Omicron,” she said.

“The survey was conducted before the burst in Omicron cases. It’s probable that Omicron will affect customer numbers, and that will make more businesses review their viability.

“The response to Omicron is devastating; the Red settings have suppressed socialising as much as under Level 3, but this time there’s no financial support.

“Orange was bearable and there was even some excitement but the shift to Red killed it.

“People are not going out, our cities are empty, and our members are rapidly running out of options.

“The Government must re-evaluate the situation and grant immediate support based on the quantitative loss of revenue, not their perception of lesser public health restrictions.”

Hospitality NZ believes that the effects of staff isolation periods will bring some otherwise sound businesses to a quick end.

“Many businesses could be closed for many weeks by staff stand-downs. That will be too much to bear,” Ms White said.

Echoing her comments, Lone Star NZ operations manager, Paul Steiner, said the brand, strength, and resilience of the company’s 24 franchisees will get them through the year.

“But it is tough,” he said.

“We are also experiencing erratic revenues, on top of last year’s enormous challenges. It is the compounding nature of this situation that is a real challenge for all.

“Business under Red settings and Omicron is being likened to Level 3 settings with the dining room doors open.

“Our Guests feel the same. Their mindset has changed. They’re not optimistic. They’re very wary. Just one local Omicron case can stop multitudes of them going out. The usual patterns of our trade have been very disrupted this year.

“We will navigate through the next two to three months like we have the last two years. But that will be too much for a great many of our industry peers without financial support in our sector to cover losses, and without loosening operational rules to help us all stay open.”

Mr Steiner said that many businesses have already changed everything they can to continue, from selling assets to bank borrowings to cover mounting costs.

“It is frustrating for everyone to have worked so hard in support of the health response strategy, and still the end to restrictions isn’t coming,” he said.

Meanwhile HNZ has released a sobering five-minute video ‘Hospitality Under Omicron’ which graphically chronicles the hardships businesses are facing across the length and breadth of the country.

The video can be viewed here.




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