Scenic Hotel Group mothballing hotels in Dunedin and Franz Josef

Wednesday, 22 April 2020

Prime Minister Jacinda Ardern and Dr Ashley Bloomfield give an update on coronavirus with six more cases on Wednesday.

The Scenic Hotel Group is mothballing some of its 17 hotels as it faces losing up to $14 million in revenue during the coronavirus pandemic.

New Zealand's tourism industry had been suffering since the Government placed a ban on travellers from mainland China in early February. All international tourism was halted when New Zealand shut its borders to non-residents on March 19, and domestic tourism stopped as the nation prepared to go into alert level 4 lockdown.

The Government does not know when the country's border can reopen. It is unlikely the New Zealand tourism industry will recover until after a Covid-19 vaccine is found, which scientists estimate could be at least 18 months away.

West Coast tourism mecca Franz Josef has taken a hit since the ban on Chinese tourists in February.

Scenic Hotel Group managing director Brendan Taylor said the hotel chain, which owns Scenic and Heartland hotels, had taken a significant hit.

As the tourism industry takes a massive hit from the Covid-19 crisis, some high-end lodges are now looking to target more of the domestic market in order to keep the doors open. (First published April 9, 2020)

* Relief over more wage help confusion over whether hotels are essential**

'The reality is we will have to close some hotels for 18 months. With having a hotel closed we are still losing between $50,000 and $70,000 a month.'

The company still had to pay millions of dollars in council rates for its closed and near-empty hotels. Taylor said he hoped the Government would look at giving companies some commercial rates relief.

Franz Josef Glacier is one of the most accessible in the world.

'We have two hotels in Dunedin with 170 rooms in one and 140 rooms in the other. There is no way we will get occupancy back to what it was. We are better closing one and keeping the other one going. Even if we get 30 per cent occupancy we are still losing a lot of money.'

Te Waonui Forest Retreat hotel in Franz Josef would remain closed for 18 months, but the Scenic Hotel in Franz Josef and the Heartland hotels in Fox Glacier and Haast would open back up under alert level 2.

Taylor said the hotels that would reopen had public cafes and bars, which were used by locals.

He did not expect many tourists, so the reception areas would be closed and any check-ins handled by the bar staff.

The Government's wage subsidy scheme had helped the company pay wages to the 900 staff working across its 17 hotels. The company's annual wage bill was about $30m.

Taylor said they would look at reducing the prices of rooms to attract more Kiwi visitors.

'We are trying to adjust them into more realistic prices for the domestic market, but the reality is if we drop them too far we are wasting our time.

'We've worked out different scenarios, and from best to worst case we are losing $5m or $14m. There is no upside,' he said.