Tourism Export Council warns businesses will fail without more Govt support

Tuesday, 2 February 2021

In 2000 New Zealand hosted 30,000 visitors from China, and that had increased more than tenfold by the time the pandemic saw them shut out in 2020. Video first published in June 2022.

The Tourism Export Council wants the Government to stump up another $200 million in support and warns key businesses will fail if further help is not forthcoming.

A briefing prepared for Tourism Minister Stuart Nash said targetted restart grants to cover wages and fixed costs were desperately needed for operators who pre-Covid relied on the international market for more than 70 per cent of their customers or income .

Tourism Export Council (TEC) chief executive Lynda Keene said there was the very real prospect of such businesses closing if the borders remained closed to long haul visitors this year, and those in the inbound tour and the transport sectors were both seriously at risk.

“Without further support a lot of businesses that were sustainable under normal trading conditions will simply disappear in six to nine months.

“Most are highly ethical, family owned operators who will not have the resources to survive.”

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The Tourism Export Council said some tour coach businesses had suffered a 90 per cent drop in revenue, and along with many rental car and campervan companies, they had parked up their fleets, while still carrying high fixed costs.

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Keene said inbound tour operators (ITOs) used to bring in half of all overseas visitors generating $9.4b annually pre-pandemic, but they faced zero income until the borders reopened because it was extremely difficult for them to switch to the domestic market in competition with local travel agents.

Twenty-six large ITOs were offered $20m in loans as part of last year’s $400m tourism rescue package last year, but a further 80 or so had not received any Government support.

Tourism operators attracting domestic visitors have reported good business this summer, but bookings in places such as Queenstown have been well down.

Transport and accommodation businesses were not eligible for strategic tourism assets grants and loans, and while many had used current financial packages, they were reluctant to take on more debt without an indication of when the border would reopen.

TEC recommends sharing the $200m between ITOs ($62m), tourism operators ($67m) and Air New Zealand and airports ($71m), with unused strategic assets loan money redirected to those most in need.

The package would include $200,000 grants for 200 businesses running hotels, transport companies, and tourism attractions, and it also moots dropping Department of Conservation concession fees for three years.

TEC forecasts suggest New Zealand could return to pre-Covid visitor numbers by 2025 if the international visitors began returning from October.

Te Anau tourism operators face another year of uncertainty. The Tourism Export Council says areas that are some distance from large urban centres have suffered the most, and it wants the Government to come up with a tourism recovery plan so the sector is ready when the borders reopen.

Keene said the industry needed three to six months notice of a reopening date, so it had sufficient time to promote packages in long haul offshore markets which traditionally booked well ahead, and airlines needed time to ramp back up.

It was also critical New Zealand reopened its border around the same time as Australia because many long haul passengers tended to do both countries in a once-in-a-lifetime trip.

“If Australia is open and New Zealand is not, visitors will simply book a 30-day Australian holiday and New Zealand will be off the bucket-list for years to come.”

Keene said our reputation as a destination was at risk if key businesses, big and small, were not around when overseas visitors returned, leaving big gaps in tour itineraries, which made New Zealand harder to sell.

“The intel we’re getting from businesses is that they’re going to have to go into permanent hibernation, or just physically wind their businesses up, because they are going to be hitting 12 months of zero revenue or only trading at 10 to 20 per cent.

“This is the third or fourth wave of hard decisions and it will force people to go ‘we’ve just got to get out of this game now.’”

Last year the Department of Conservation Department waived concession payments by tourism operators for 16 months, but there are moves to have that extended.

Owner of Queenstown’s Villa del Lago Apartment Hotel Nik Kiddle said the Government’s bail out of major tourism operators via strategic assets funding, and its outsourcing of managed isolation facilities to international hotel chains, needed to be balanced with a budget support package for small tourism businesses.

He said South Island operators were urgently seeking a meeting with Tourism Minister Stuart Nash to put their case.

“We’re trying to highlight a deteriorating situation in which the goal posts are being moved further and further away.

“The hopes and assurances of 2020 around bubbles, managed travel, and vaccine availability are now no longer within grasp, and we need a Plan B.”

Wellington operator Ted Guise of Adventure Safaris has parked up his vehicles and is now on the unemployment benefit after 16 years guiding Lord Of The Rings tours mostly for international customers.

He was surviving on savings and said he would have to close the business permanently within six months if no Government support was available.

“I personally feel the international tourism market will not come back to New Zealand for three years.”

Christchurch-based Terra Nova Coach Tours was previously active in the German market and director John Gregory said he had been disappointed at the response to the plight of ITOs heavily reliant on international income.

He described it as being similar to the Government thinking Fonterra wasn’t necessary to distribute dairy products.

“We get the feeling that the Government doesn’t really value us, yet we’re key strategic partners in tourism.”

Gregory said international media reports of Prime Minister Jacinda Ardern’s announcement that the border was likely to remain closed until 2022 had damaged his business substantially, and a recovery plan was needed.

“The German market is very black and white, and they’re not doing anything going forward because the Government says the border is closed … I think one of our biggest concerns is that the Government is looking forward to 2025 but not commenting on how we can re-engage with the international market.”

Last week, in response to concerns raised by Queenstown businesses, Nash said he understood tourism in some parts of the country was still facing challenges despite the strong rebound in the economy at the end of 2020.

Work to support and rebuild the tourism and hospitality sector would be on-going, and he planned to visit Queenstown again soon.

He reiterated that tourism had received an estimated $1.8b under the wage subsidy scheme, and almost $300m in interest-free loans under the small business cash flow loan scheme administered by IRD.

Additional reporting by Nadine Porter