Coronavirus: $20 million in cheap loans to keep 26 inbound tour operators afloat

Wednesday, 2 September 2020

Inbound tour operators putting together packages to visit New Zealand’s famous attractions have been offered financial help to remain in business.

The Government is offering 26 inbound tour operators $20 million in loans to ensure they survive the border closure.

The loans were part of the $400m tourism rescue package, but inbound tour operators (ITOs) were sorely disappointed at being ineligible for cash grants offered to 131 tourism attractions classed as “strategic assets.”

Tourism Minister Kelvin Davis said the favourable terms and extended repayment periods of the loans were the same as those available under the strategic assets scheme.

The five-year loans are interest free for the first two years, then 3 per cent per annum after that, with no repayments required until the third year of the loan.

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Minister of Tourism Kelvin Davis has repeatedly warned the tourism industry the Government cannot ensure all businesses survive the Covid-19 pandemic that has closed our borders to international visitors since March.

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The 26 ITOs, chosen on the recommendation of Tourism New Zealand because of their strategic importance and coverage of key overseas markets, will be notified of the offers this week.

Davis said it was up to them to decide whether the loan arrangements suited their current and future operations.

However, the scheme is cold comfort for many ITOs, some of which have already closed their doors.

They include Darfield-based Naturally New Zealand Holidays, which specialised in the Indian market, and went into liquidation last month after 25 years in business.

Tourism Export Council (TEC) chief executive Lynda Keene welcomed an extension of the loan scheme which was initially going to cover just 10 ITOs,

She said not all inbound operators would take up the loan offer because they currently had no income, and TEC would continue to seek grants as well.

“This will ensure inbound tourism operators are treated the same way as other parts of the sector.’”

Keen said that pre-COVID, more than half of all international visitors were booked through offshore and New Zealand inbound tour operators, which equated to $9.4b of the $17.2b in tourism export receipts earned for the economy.

Tourism New Zealand chief executive Stephen England-Hall said the industry’s recovery when borders reopened would be slowed significantly if major ITOs did not remain in business.

“We have to ensure a critical mass of ITOs survive throughout this crisis for New Zealand’s economic benefit.”

England-Hall said TNZ promoted New Zealand overseas, but ITOs packaged up the various attractions and sold them via overseas travel agents and wholesalers.

“We can drive as much demand as we can at TNZ, but you still need infrastructure there to convert that into customers, because we don’t actually have any sales people in that respect, so the ITOs are crucial.

“For me it’s the same as taking A2, Synlait and Fonterra out of the dairy industry and expecting the consumer in downtown Shanghai to call the farmer [in New Zealand] and ask for a block of cheese,” said England-Hall.