A bumper ski season has boosted hotels in Queenstown. Photo / Miles Holden/Tourism NZ
Hotels are hoping the relaxation of rules for some overseas workers signals a willingness from the Government to work on systemic workforce shortages that are forcing some to limit the number of rooms on sale.
Accommodation providers are worried that 20 per cent price increases for guests compared to 2019 won't be matched by service because of a chronic staff shortage. This has also forced some hotels to turn away guests, and owners say they have had to close bars at a time when they are trying to recoup heavy losses suffered when borders were closed, wiping out over half of their potential business.
Ahead of a gathering today of 450 hotel and tourism industry delegates in Auckland, the Government moved to take some of the heat out of growing anger from hotels and other hospitality providers by removing the requirement for chefs to be hired through an Accredited Employer Work Visa (AEWV).
"Removing this hurdle of qualifications checking is a commonsense outcome when New Zealand's hotels and motels are desperate to rebuild their workforces after Covid," said James Doolan, strategic director of Hotel Council Aotearoa (HCA).
But he said this was just a first step, noting it came with the requirement to pay higher wages for those coming in to meet the threshold, and that the country's 350 hotels needed a range of workers, from cleaners to managers.
Doolan said the Government had been warned a year before borders opened that labour shortages would hit, and the industry wanted the same sort of dialogue the horticulture industry was having with ministers over worker shortages.
"New Zealand's hotel performance continues to improve but lags behind many other Asia-Pacific destinations due to our longer periods with border restrictions. A key challenge facing hotels here continues to be a severe labour shortage," he said.
On Sunday the Government announced the amended temporary threshold for tourism and hospitality businesses will, from April 2023, rise to 95 per cent of the median wage, or $28.18 (based on the new median wage of $29.66 per hour).
This new temporary AEWV threshold was still an increase of 12.7 per cent above the existing $25.00 per hour threshold for tourism and hospitality, and 32.9 per cent higher than today's minimum wage.
"Those are large increases for a sector that's already struggling to deal with cost increases across almost all parts of the business," said Doolan.
The HCA and other tourism industry groups had sought an extension of the $25.00 temporary AEWV threshold until April 2024, or when international tourist arrivals returned to pre-Covid levels.
But Immigration Minister Michael Wood said this week that the Government was focused on moving New Zealand to a higher-wage economy, increasing the skill level of migrant workers, and encouraging employers to offer competitive wages and improve career pathways for New Zealanders.
"This policy is beginning to work, with clear evidence of better pay and conditions in a range of sectors, which will create a more sustainable labour market for everyone," said Wood.
But Doolan said tourism businesses were often in isolated locations with not enough permanent residents to fill all entry-level roles.
"If New Zealand wants to attract international tourists to destinations such as Queenstown, the West Coast, Rotorua, or the Bay of Islands, then we need imported labour to those destinations because demand is highly seasonal."
The council was not convinced that a blunt median wage threshold for almost all immigrant labour was the best long-term policy for New Zealand.
He said hotels supported the Government's goal of creating career pathways into well-paid jobs in tourism and hospitality, but making tourism an NCEA-recognised subject had taken some time.
Figures released today show that room nights sold in New Zealand's major hotels returned to about 94 per cent of pre-Covid levels in September, according to an analysis of data reported by Hotel Data New Zealand (HDNZ).
A report by consultants Horwath HTL said all but three markets had returned to pre-Covid demand levels.
However, despite the demand recovery and strong growth in room rates, revenue per available room was well below levels needed to absorb increased costs for many hotels.
The demand recovery coincides with a period when international arrivals reached approximately 65 per cent of the numbers reported for September 2019, according to provisional data reported by Stats NZ.
Hotel occupancy levels still have some way to go to return to 2019 levels. Last month in Auckland, there was the re-opening of the last three hotels used for MIQ, adding 620 rooms back to the market.
The valuable weekday business travel market is recovering, as well as small to medium-sized meetings.
However, the lack of large conference facilities in Auckland continues to drag on demand. Many more special events are needed to compensate for the lack of conference business until the NZICC opens.
Auckland and Rotorua were the areas most affected by the absence of travellers from non-visa waiver countries such as most Asian nations, who often travel in the shoulder seasons and now face long delays and uncertainties around visa processing, making New Zealand a less attractive travel destination, Horwath said.
Hotel demand for Wellington and Christchurch was back to, or exceeding, pre-Covid levels.
General business travellers and those attending meetings and conferences are even enabling some larger hotels to exceed 90 per cent occupancy on one or two weekdays.
Queenstown hotels again did well, with good snow conditions having extended the ski season to early this month.
Apart from snow sport enthusiasts, hotels also reported good demand for meetings and conferences and the return of some tour groups from visa waiver countries, Horwath said.
"Yet, occupancies could be higher if hotels did not have to stop selling because of insufficient staff or a lack of suitable staff accommodation."
Average daily rates across New Zealand hotels increased by 20 per cent compared to September 2019, to $209.
Yet, for many hotels this still leaves them well short of pre-Covid revenue per available room, let alone compensating for increases in wages and other costs, the report said.
As hotel demand continues to grow and guests need to pay more for their room, the shortage of staff becomes more urgent.
Several hotels report that their new minimum wage is around $25, which is 18 per cent above the legal minimum and 6 per cent above the living wage, Horwath says.
But a shortage of workers in New Zealand combined with complicated and slow immigration processes were slowing down recruitment and making it less attractive for overseas workers to apply for New Zealand jobs.
"Apart from the direct impact on hotels, this runs the risk of seriously impacting service levels that visitors will receive during the summer season. That could cause lasting damage for an industry whose minister [Tourism Minister Stuart Nash] has set the objective of attracting high-quality international visitors."
• Today's conference, the Aotearoa Hotel Industry Conference and Exhibition, is the first staged in this country by Asia-Pacific Hotel Industry Conference and Exhibition (AHICE) with Hotel Council Aotearoa
Volumes were lighter as investors are thinking more about the summer holidays.