Government accused of letting West Coast tourism-dependent communities 'fall over' by hotel chain boss

Thursday, 18 February 2021

Scenic Hotel Group boss Brendan Taylor says the Government seems happy to let international-tourism dependent communities on the West Coast fall over.

The Government is letting small West Coast communities reliant on international tourism fall over, one hotel chain boss says.

Scenic Hotel Group managing director Brendan Taylor said Tourism Minister Stuart Nash had not responded to communications from struggling West Coast tourism businesses for help.

The biggest problem on the West Coast was the communities at Franz Joseph and Fox Glacier “basically dissolving and disappearing”.

Their populations were shrinking to about 130 people in each community when normally they were about 500.

Scenic Hotel Group has closed the Glacier Country Hotel at Fox Glacier for want of tourists.

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When the borders opened and tourists returned there would be few tourism businesses left.

“It’s just a shame they (the Government) seem to be happy to let these communities fall over,” Taylor said.

The communities of Franz and Fox had asked Stuart Nash if there was some financial help “but we just can’t get any answers from them.”

A week ago Tourism Minister Stuart Nash (right) told “bleeding” tourism businesses they cannot expect any more support from the Government unless alert levels change. Nash is pictured with Queenstown Lakes District Mayor Jim Boult.

Nash seemed to think that the businesses had to change “but you can’t pivot when 95 per cent of your business was from overseas”, Taylor said.

A report released today said hotels not providing managed isolation and quarantine were struggling to break even and some were battling to survive with the borders closed to international tourists by Covid-19.

The report, New Zealand: Hotel Market Snapshot, February 2021, by tourism consultants Horwath HTL, said the hardest hit were hotels in Westland, Fiordland and Queenstown where there were no MIQ facilities.

“Hotel owners of non-MIQ hotels in the country’s key markets struggle to break even after all operational expenses, despite the toughest cost reduction ever implemented.”

Many would face extreme financial stress unless borders opened to international visitors, or they received more financial support, after the summer holidays end.

“Westland, is reportedly already facing several hotel closures,” the report said.

Taylor said he had email responses from the Prime Minister Jacinda Ardern and from deputy Grant Robertson saying Tourism Minister Stuart Nash would respond, but he had heard nothing.

The hotel chain, the largest independently owned in the country with 16 hotels here and one in Niue, applied for funding from the Strategic Tourism Assets Protection Programme but heard nothing.

“We are probably going to be close to losing $3.5 million to $4m along the West Coast.”

The main reason it had kept its three other West Coast hotels open was to support activities businesses, but there were few New Zealanders attracted to the West Coast for holidaying.

Australians had been a big market for West Coast tourism.

“Opening the borders with Australia would save most of the businesses along the West Coast.”

They would not make a lot of money, but they would be able to survive, Taylor said.

Scenic was reviewing its operations on the coast as there was usually no business in the winter.

Scenic managing director Brendan Taylor says a trans-Tasman bubble will save West Coast tourism businesses.

It still had quite a few staff there, about 55, and “we have to basically look after them and see what we can do there as well”.

A week ago Nash told “bleeding” tourism businesses they cannot expect any more Government support unless there is a change in alert levels.

Wim Ruepert, a director of tourism consultancy Horwath HTL, says accommodation providers in the regions did well over the summer as Kiwis headed to beaches, lakes and avoided cities.

Nash put out a statement today in response to the report by the Parliamentary Commissioner for the Environment saying a Government priority while the borders were closed to international visitors was to reposition the industry. Tourism would not return to ‘business as usual’ as it was in 2019.

Taylor said the Government had paid out “a truckload of money” to the Cook Islands, Samoa and Tonga and the Pacific region to keep their borders closed and to pay subsidies “but they won’t actually do it in their own country which to me is just strange”.

West Coast communities were “pretty sad”.

“When the towns are basically falling apart and there’s very few people, and you’ve got families having to leave because there’s no work for them,” Taylor said.

Tourism businesses in Fiordland and Te Anau were in much the same predicament, he said.

None of Scenic’s hotels provide managed isolation or quarantine facilities for the Government which is the mainstay of the hotel industry in the main centres.

The New Zealand: Hotel Market Snapshot said 2021 was shaping up to be another tough year for non-MIQ hotels.

A trans-Tasman bubble could save several hotels from extreme financial stress or closure, if 80 per cent of the estimated 2.3 million Australians considering visiting New Zealand in the first six months of travel restrictions being lifted, do visit New Zealand.

Unlike hotels in the main centres, the report, authored by Wim Ruepert, said accommodation providers in the regions reported occupancies on par or above the same period last year as Kiwis took to beaches and lake hotspots and avoided the cities for summer holidays.

The average monthly revenue per available room (revPar) sank 67 per cent for hotels in Queenstown from October 2020 to January 2021. And it was as bad, and worse, for hotels in Fiordland and Westland.

In December and January, hotel occupancy in Queenstown averaged 40 per cent compared to 88 per cent the several years before.

In Auckland in non-MIQ hotels monthly occupancy averaged 50 per cent compared to 85 per cent the year before.

Bookings for the America’s Cup in March looked promising but were soft for the qualifying events.

Average daily hotel rates were holding up in Auckland because the new hotels were being “rational” about their prices.

Wellington hotels had benefited from a traditionally greater share of domestic and government business with revPar declining 33 per cent, including MIQ hotels.

In Christchurch and Rotorua revPar had declined 46 per cent.