Bay of Plenty hospitality margins ‘squeezed’ even as spending up in spite of Cyclone Gabrielle

Hospitality business margins are “squeezed” after a dreary summer, despite a rise in consumer spending, Tauranga Business Chamber chief executive Matt Cowley says.

However, a Bay of Plenty Restaurant Association spokesman says business in recent weeks has been “better than normal”.

The comments come as Worldline New Zealand data shows card spending in the Bay of Plenty rose in February, despite Cyclone Gabrielle’s “major influence”, shown in a drop after it hit.

Cowley said the poor summer weather left sectors relying on domestic tourism feeling “robbed”.

“Hospitality margins have been squeezed despite the rise in hospitality card spending. Food costs, rents, and staff wages have faced double-digit increases in recent times.”

Cowley said the Bay of Plenty was very lucky to avoid the damage experienced by neighbouring regions. Effects of the cyclone, however, could still be felt.

“Looking ahead, prices will continue to increase due to the shortage of building supplies, staff, and damage to local food crops across the upper North Island.”

Tauranga Business Chamber chief executive Matt Cowley. Photo / Mead Norton

Restaurant Association Bay of Plenty branch president Andrew Targett said in his experience, business in the Bay was “better than normal”.

“I’ve been helping at a local restaurant, and they were full for three weeks,” Targett said.

“People are out there spending money, there’s no doubt.”

Targett said Tauranga had fewer cyclone-related business closures than elsewhere in the country.

“I think we’ve been lucky.”

Hospitality businesses had been experiencing supply chain issues since Covid-19, but the cyclone “added a layer” to the situation.

“It’s not dire, but existing issues might have been exacerbated.”

Worldline, which runs New Zealand’s largest Eftpos network, found spending in February was up 7.7 per cent on last February and up 17.1 per cent before Covid in February 2019.

National retail consumer spending in February this year was $2.8 billion.

Worldline New Zealand chief sales officer Bruce Proffit said Cyclone Gabrielle had a “noticeable impact” on spending.

“Data showed spending dropped sharply between Monday, February 13 and Tuesday, February 14 in Auckland, Northland, the Waikato, the Bay of Plenty, Gisborne, Hawke’s Bay and Taranaki,” Proffit said.

“For the same regions, spending increased sharply before the cyclone, which offset the decrease.”

Proffit said the growth was partly due to the effects of severe weather in February, as well as higher tourist numbers.

“At this time last year, New Zealand was still in high-alert mode around Covid, meaning consumer spending was significantly curtailed, so it is not surprising to see a sharp rise on last year,” he said.

Worldline’s data accounts for about 70 per cent of total transaction volume across the country.

Retail New Zealand chief executive Greg Harford.

Retail New Zealand chief executive Greg Harford said Cyclone Gabrielle had a big impact on business owners.

“Retail took a real hit during the cyclone,” Harford said.

“And while we’ve seen a rebound post-cyclone, the effects of that rebound have not been equally spread.”

Harford said while grocery and hardware retailers had seen an increase in demand since the cyclone, sales were still down in fashion and homeware.

Businesses in the Coromandel and Hawke’s Bay were struggling, Harford said.

“Things have been pretty tough. Some businesses are struggling to recover from the loss of even a few days of trading.”

Going into the future, Harford said Retail New Zealand was expecting businesses in the cyclone-affected areas to continue to struggle.

“There are questions about how soon people can return to work and about what’s going to happen to people’s disposable incomes.”

Harford said particularly in areas where retail benefitted from the tourism industry, such as the Coromandel, transport played a significant role in retail getting businesses back on their feet.

A report released by Stats NZ on Wednesday predicted economic statistics from March 2023 onwards would be affected by recent weather events.

Stats NZ general manager of economic and environment insights, Jason Attewell, said the focus of the report was on forecasting how adverse weather has impacted the economy,

“The cyclones and flooding have affected the economy through disruption to economic activity and loss of assets,” Attewell said.

“People and communities have been affected too, and our thoughts are with them.”

Attewell said the specific impacts of ex-cyclones Hale and Gabrielle are expected to be seen in results from the March 2023 quarter.

“Effects on data or collection will be explained alongside relevant statistical releases.”