City centres will be 'ghost towns' again under red setting, hospo boss says

Sunday, 23 January 2022

City centres will become ‘ghost towns’ in the coming days.

Cafe and restaurant owners expect city centres to become “ghost towns” again as the country moves to red setting on the traffic light system, says hospitality sector leader Marisa Bidois.

Prime Minister Jacinda Ardern announced the country will move to red setting at 11.59pm on Sunday to manage the spread of the Omicron variant of Covid-19.

It will mean restrictions on the activities of daily life, including limitations on the way shops and hospitality businesses can operate, but owners of cafes, bars and restaurants also expect to see a wave of omicron “hesitancy” resulting in many people choosing to stay home, rather than eat out, or shop.

“Diner hesitancy is real, and we see it happen each time there is an announcement,” said Marisa Bidois, chief executive of the Restaurant Association.

* Business concerned about potential rapid spread of Omicron

Econ Talks - How might Traffic Lights and Omicron affect the economy (1 December 2021).

* Covid-19: Whole country will move to red in event of Omicron community outbreak

“Omicrom is new to these shores. It does cause some hesitancy in the public, which certainly isn't good for our businesses,” Bidois said.

The double impact of the red setting, and public hesitancy to go out to work, dine and shop, would have an especially large impact on city centres, she said.

“They turn to ghost towns,” she said.

Many large companies had adopted policies which require their employees to work from home at red on the traffic light system, Bidois said.

That meant lunchtime business, and after-work socialising were badly hit.

“Our CBDs clear out during these announcements,” Bidois said.

Restaurant Association chief executive Marisa Bidois said it was only a matter of time before it became cheaper to grab a takeaway than to make the same meal at home.

Under the red setting on the traffic light system, hospitality businesses had trading restrictions, Bidois said.

They could have a maximum of 100 people in a venue, but there was also a one-metre social distancing requirement, which meant some smaller cafes, bars and restaurants had lower effective limits on customer numbers.

“If you have a 40 square metre dining space, you need to make sure you have your distance between guests, which means you are limited depending on the size of your space,” Bidois said.

Guests must also be seated and separated, she said.

That challenged the core business model of some hospitality businesses like nightclubs and bars, she said.

Bidois called on the Government for financial support for hospitality businesses, which were struggling after two years of trading restrictions.

“We know these restrictions are necessary to battle and manage omicron, but there is definitely concern coming from our sector, especially businesses based in CBD areas,” she said.

“We really would like to see financial support for businesses at red level. That would ease some of the concerns that our businesses are having.”

Hospitality businesses have been among the top four sectors where businesses have missed payments on loans or to suppliers, data from credit reporting company Centrix has shown.

Tourism, transport and property were the other worst-hit sectors.

“We have lost some, but we haven’t lost as many as we first thought, when Covid-19 hit these shores,” she said.

There had been extreme stress and strain on business owners, Bidois said.

Many of those which had survived had taken on significant debt to get through lockdowns and trading restrictions.

Many hospitality businesses had now negotiated new lease deals with their landlords, which often now included mechanisms to pay lower rents during periods of restricted trading, Bidois said.