Lockdowns and now the red light setting have ravaged tourist towns such as Queenstown. Photo / George Heard
The international tourism industry is on the brink of collapse without targeted financial support and if the self-isolation requirement for fully-vaccinated visitors is not removed as soon as possible, says an industry group.
"International tourism businesses are holding on by a thread. The situation is as dire as it could be and businesses desperately need help and hope," said Lynda Keene, chief executive of the Tourism Export Council of New Zealand (TECNZ).
She said the industry needed decisions now on those two issues, not in three months' time.
The council has run a survey of its members which, pre-pandemic, were a big part of the $17.5 billion international tourism sector.
"We are not trying to be alarmist, we're simply stating facts. For two years our businesses have done everything the Government has asked of them but the goalposts keep getting moved. The red traffic light setting has exacerbated any chance businesses have had in trying to generate cashflow and save their businesses."
Keene said the survivability rate beyond three months looks grim.
The Government is now looking at targeted relief from its depleted Covid fund after calls from tourism and hospitality businesses.
The Government paid out at least $6b during what was meant to be a "short sharp" lockdown when the Delta outbreak hit last August, at a time when the delayed vaccine rollout had reached only about 20 per cent of eligible Aucklanders.
Yesterday Tourism Minister Stuart Nash told the Herald through a spokeswoman that the Government was continually monitoring the Omicron outbreak's impact on businesses, including up-to-date sales data.
This showed that overall economic activity was down, but only a little. However for some sectors, including hospitality, the drop in business had been significant, said Nash.
"The red setting of the Covid Protection Framework does allow almost all businesses to operate," he said. "But it is clear some people are behaving more cautiously than the setting requires."
Nash said he had met Queenstown mayor Jim Boult, who had raised the issue of targeted support.
"I passed on the proposal to tourism officials in MBIE for analysis and advice, and raised it with the Minister of Finance. Grant Robertson has already noted that as with the recently announced arts and creative sector package, we are actively considering whether further, targeted support for some sectors is necessary, and we will make announcements in the near future as appropriate."
The council's most recent survey shows that if Inbound Tour Operators (ITOs) do not get targeted support and if the self-isolation requirement is not removed by May, then 15 per cent of ITOs said they definitely would not survive and 65 per cent said they might not survive.
"Combined, that is up to 80 per cent of all ITOs under threat," said Keene.
From data provided by Tourism NZ and the International Air Transport Association in 2020, the council calculated that about 55 per cent ($9.6b) of international tourism receipts came through the New Zealand travel trade, including ITOs.
"Every ITO distributes their bookings to hundreds of tourism business across New Zealand. If ITOs do not survive, their bookings will simply vanish."
Keene said that would severely set back the recovery of international tourism and the New Zealand economy for many years to come.
"This is reflected in the survey results from our allied members (activity/attractions, transport, accommodation) showing 44 per cent aren't sure if they will survive the next three months and 15 per cent saying they won't.
"This is because these tourism businesses have been in lockdown for half of 2021 and are now severely restricted with the red light setting," said Keene.
"Looking forward, they also realise that international visitors simply won't come to New Zealand to holiday if they must self-isolate.
"It's a competitive marketplace and New Zealand must have a strong voice and profile. It is imperative Tourism New Zealand is mandated to refocus its budget on international marketing and ITOs are resourced appropriately to capitalise on converting the millions of dollars in the system to actual visitors on the ground."
Competition with our main destination rival - Australia - is fierce, and now they had the ultimate advantage with isolation-free travel starting this month.
"Many other destinations around the world have already removed all barriers to travel including the removal of any pre-arrival testing."
Council chair Scott Mehrtens said bookings for the next two-and-a-half years were dramatically down compared to what they would normally be.
Businesses would not last until July, when visitors are expected to return (although they currently face self-isolation).
"We implore government to save New Zealand's number one export industry (pre-Covid) and provide us with targeted support and a date for quarantine-free travel that we can all 'bank on'. The industry needs a lifeline."
What is TECNZ asking for?
• A third tranche of tourism funding (grants) for international businesses
• Targeted financial support for ITOs and tourism businesses most impacted by the border closure for visitors and the red setting hitting domestic travel
• A target date for no isolation and quarantine-free travel for fully vaccinated visitors
The council is preparing a business case for financial support which it hopes to present to Nash in the next few days, and hopes Cabinet will seriously consider supporting the recovery of New Zealand's international tourism sector.
Nash said yesterday that the Government has invested heavily in two tourism-specific support packages worth $600 million, as well as substantial broad-based support via the wage subsidy and the resurgence support payment.
Over the past six months it paid around $602m to 140,000 tourism and hospitality businesses for their fixed costs, through the resurgence support payment.
Zero-interest loans are also available through the Small Business Cashflow Loan Scheme and in addition, tax write-offs through the loss carry-back scheme worth $30m were paid to tourism and hospitality businesses in the past six months, Nash said.
Tourism Export Council members include inbound tour operators and attraction, activity, accommodation, transport suppliers, regional tourism organisations and tourism services providers.
The survey showed 87 per cent of ITOs tried to attract domestic business and concentrate on Australia when the transtasman bubble was open. Just on 35 per cent picked up or started to pick up a "little" business but the rest were unsuccessful.
"This was largely due to the constant shift with lockdown periods and changing Covid travel restrictions, especially around the Auckland, Waikato and Australian borders."
Customers cancelled bookings after shifting them three to four times.
"The red traffic light system has essentially crippled the intention of customers to travel domestically for the next three months."
The Government has committed funding to the sector in an effort to support future plans.