Lockdown Extension Puts The Hospitality Sector’s Survival Under Threat– Targeted Support Is Required

The Government’s decisions to extend Auckland’s Level 3 lockdown restrictions (until Sunday, 30 August at 11.59pm) and keep the rest of the country in Alert Level 2 is hugely disappointing and frustrating for the hospitality industry, says Hospitality New Zealand.

Hospitality New Zealand Chief Executive, Julie White, says “The safety of all New Zealanders is our first priority. We supported the Government’s directive to stamp out COVID-19 when it reemerged in the Auckland community, however, it’s very frustrating for the regions outside of Auckland to still have to operate under Level 2. It’s still extremely restrictive for our operators.

“With this extension in Auckland, the hospitality sector will be in a state of carnage, because these lockdown measures will have a ripple effect across the entire country,” adds White.

Whilst it was said that up to 80 percent of businesses were able to operate at Level 3 in one form or another, Hospitality New Zealand says that for its sector, operating at Level 3 was still similar to lockdown.

According to MBIE’s latest figures, Auckland’s domestic spending was already down 33% last week, compared with the same time last year and Food & Beverage spend was down 36.8% and accommodation down 47.5% nationally (week ending 18 August 2020). These figures were particularly disappointing, as retail card spending in the hospitality sector had just hit the strongest level for a July month since data was recorded.

“Unless you have a food and beverage establishment that is fully set up for takeaway service, it’s very difficult to operate under Level 3, as you simply don’t generate enough income to sustain working seven days a week.

“And as for operating under Level 2, this is still quite prohibitive because abiding by the three S’s and limiting venues to 100 people, greatly reduces income.”

White also adds that operating under a cloud of such uncertainty with possibly yo-yoing between Alert Levels is not a sustainable solution.

“We are all doing our part to keep our fellow Kiwis safe, but the Government’s decision still leaves great uncertainty. We cannot continue to go up and down Alert Levels and in and out of lockdown. The uncertainty is decimating our sector. These businesses need time to prepare stock, adjust rosters and have grappled with changing restrictions at each Alert Level. We need some solace.

“There’s also a real concern that many Kiwis have COVID lockdown fatigue. As people’s adherence to the rules begins to wane, that unfortunately puts further pressure on our operators to ensure their customers abide by them. This all comes at a big financial cost for these already struggling businesses,” adds White.

Hospitality New Zealand says the one silver lining for lockdown 2.0 was the strong numbers of downloads for the Government’s COVID Tracer app, with more than 1.7 million registered users to-date.

“With two thirds of our population not moving around the country, we need Kiwis to go out and support local hospitality providers. We encourage all customers to continue using the COVID Tracer App and start regaining a sense of your normal routine - that’s the only way the sector will survive.”

Hospitality New Zealand continues to advocate for a targeted support package from the Government’s $14 billion COVID Recovery Fund, as the industry continues to be hammered by the ongoing impact of the Alert Level restrictions.

“The extension of the wage subsidy has indirectly helped business owners, but it only goes towards staff wages and doesn’t help with fixed costs. Business owners are best placed to make decisions on their business so a cash injection, like a working capital grant, will make a real difference.

“Our backs are up against the wall; we’ve suffered huge economic pain and we’re pleading as an industry that is on its knees. We urgently need targeted support - where’s the appetite from Government to come to the party on this?” concludes White.

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