Overseas visitors are starting to trickle back to NZ, but for some small tourism businesses it’s too little, too late. Others hope the flow will be enough to refloat their boats. By Dale Owens.
It's been a while since the Aussie twang has been heard in some of Aotearoa's most scenic spots. From the middle of April, however, rare sightings of Aussie tourists have become more common, as New Zealand has finally joined many other countries in prising open international borders.
Our trans-Tasman neighbours were the first to be welcomed back, in time for the school holidays. "The school holidays are going well now. Being back at Orange is a help and people are out and about travelling, so that's great," says Ann-Marie Johnson, from Tourism Industry Aotearoa. "What we are hearing from operators, though, is that it's mainly New Zealanders coming back from Australia rather than actual Australians coming here for a holiday."
From the beginning of May, more exotic species – including vaccinated travellers from other large tourist markets, such as the UK, US, Japan, Germany, South Korea and Singapore – will also begin to trickle back.
For many tourism businesses, the flow of international travellers can't come soon enough. "If this had gone on for any longer and, for example say, the borders had been closed for another six months, I categorically know that you were going to see a large number of tourism businesses give up, throw the keys away and say, 'I've had enough'," says Nigel Hobbs, managing director of Altitude Tours, in Queenstown.
Hobbs and his partner, Heidi Farren, got into the tourism business in 2017. They started with small group wine tours around the Gibbston Valley, and soon expanded into daily tours of Milford and Mt Cook. They started New Zealand's first gin tour, and also operate a luxury brand, Black. The past two years have been hell, he says.
"We have days with zero revenue at the moment. We are talking 'it's dead'. We are hurting the most right now. We're burning the most amount of money. Since mid-January, all the way through it's been pretty tough."
Altitude Tours is running at about 25 per cent of normal revenues. Black is faring worse, at about 15 per cent of pre-Covid levels.
"On a monthly basis across Black and Altitude, we're burning close to $50,000 a month in real losses. After we've done everything we can with all the revenue we've got, we're still losing money. I ended up selling things like the caravan, my own car, I took superannuation out of Australia, I'd spent my savings in my bank account, I sold artwork off my walls. I certainly have taken a very big personal hit, to take the weight off my businesses so that they could survive."
Not everyone in the industry has managed to hang on.
In early 2020, tourism across the country was humming. The streets of Auckland were vibrant, diverse and exploding with humanity, as enlightened international travellers ticked us off their bucket lists. It was boom time and, not wanting to miss out, I was right in the thick of it.
It seems so long ago now, but I can still recall the humid February air hanging over Vulcan Lane in the central city, filled with the sounds of laughter, and the sweet smell of fried chicken and hoppy beer. It was the final stop on the Great Auckland Craft Beer Hunt and, crammed around a table in the middle of a busy pub, I was sitting perched, amazing eight North Americans with my ability to eat many different hot sauces. I was a tour guide, owner and operator and, like many, I was grafting and hustling for the tourist dollar.
Eighteen months previously, my partner and I had started a small group tour business from scratch, building three of Airbnb's most popular experiences for small group travel in Auckland.
As tourist numbers grew, so did our visitors' thirst for a more authentic and intimate exploration of Kiwi destinations. Experiences ran daily from early to late in the evening to accommodate the huge appetite. And it wasn't just us doing well.
Liz Lyons ran hugely popular walking tours in Auckland. "We would meet downtown and show you all around and along the way talk about New Zealand's culture and history and the best places to eat, shop and go while you're staying in Auckland. It was almost like a walking concierge or walking introduction to the city that I love, and just making people see it through different eyes, getting them off the main trunk route."
Lyons specialised in showing people hidden gems they would struggle to find in the guidebook. I use the past tense but I shouldn't, as Aucky Walky is still very much in business. The only problem is that it is still waiting for most of its potential customers to return.
As the virus spread like wildfire across the globe, cruise ships became a focus of traveller case numbers. With so many people coming in and out of the downtown area every day, my partner Kate and I decided to stop our tours and close our business until further notice. When Covid arrived and the borders shut, I remember feeling stunned. On my last day tour guiding on the Great Auckland Craft Beer Hunt on February 15, 2020, I had no idea it would be my last.
Lyons recalls a similar feeling. "The tap turned off virtually overnight. I always had a pipeline of new product experiences. I just had no time to work on the business because I was working in the business. I recruited two guides who were going gangbusters. So I could sort of feel like there was just a great opportunity here to grow the business."
For Lyons, it was a huge shock. "It was almost numb; a feeling of numbness. 'This can't be happening. What are we doing? You know, we're closing the country off. We're just going to retreat into our homes.' It was grief on a number of levels. The business had fully consumed me for four or five years, and I was suddenly at a bit of a loose end."
Across Auckland's Hauraki Gulf, Jean Goodbrand and Wayne Eagleton, the owner-operators of Waiheke Island Wine Tours, had also been enjoying another bumper season.
"The whole country was going nuts," Goodbrand recalls. "It was great because everyone was on a high. We had enough guides so we could run every day and everyone could have a break. Eagleton worked as a driver and guide. "It was showing no signs of slowing down until, like the rest of the world, we got the pandemic."
After starting the business in 2011, the couple enjoyed incredible growth. Waiheke became a popular destination for overseas visitors, mainly for its wine and stunning scenery. "In 2016, it really started to change quickly," says Eagleton. "There were more and more people, to the point we were really struggling on the island to keep abreast of it."
During the 2018-19 season, Waiheke Island Wine Tours took more than 3000 people out to the local vineyards.
The pair started making plans for retirement and began to think about selling the business they had nurtured. "We thought about putting the place on the market, and our consideration, with input from the accounts, put the business at around $400,000 to sell," he says.
Goodbrand got the ball rolling. "As we were heading into April 2020, at financial year end, we were lining up the accountants to do our books quickly, so that we could get the business on the market and sell it because, ideally, you sell it in winter."
As news of the outbreaks of Covid-19 in faraway places such as Wuhan and Lombardy began to fill our news feeds, it became more and more obvious that tourism was crashing. Bookings quickly became cancellations.
"They just stopped. It was like someone just turned off a tap," says Goodbrand. "We started looking at each other and saying, 'Should we be going out today?' I mean, we were full. We were full right up until March 23. And we sat here for two weeks after, absolutely terrified that we were going to end up with Covid, because of the cruise ships."
Down in Queenstown, Nigel Hobbs and Heidi Farren had also been enjoying the boom times. "Not many people were looking at small group travel and curating experiences the way we were doing it," says Hobbs. "So, everything that we tended to touch was turning to gold." Nevertheless, they were working hard and hustling as much as possible. "We were getting fantastic reviews from customers, which kept us motivated. We were employing more people and moving into bigger premises. We were buying more vehicles and doubling down everywhere to keep up with the demand."
The company took on debt, extra financial commitments, and more office space. Although it had a risk register, it didn't include the possibility of a pandemic. "We never thought there would be anything that would stop international tourists from coming into New Zealand."
When the pandemic hit, Altitude, like many other tourism businesses, lost all its bookings. Overseas travellers started to make their way home and finally New Zealanders were asked to sit tight for a lockdown.
For Hobbs, the sudden loss of paying guests was devastating. "I actually thought I could potentially lose everything. I'd lose not only my businesses, but I thought, 'Well, if we have to close the businesses down, then the debt we have is personally guaranteed. So naturally as a director or an owner, I'm going to have to be liable for this.' And so I was thinking, 'Oh well, shit. I'm going to have to sell the family home.'"
The tourism boom between 2014 and 2019 not only affected our major destinations such as Queenstown, Rotorua and Auckland, but also remote locations such as Ōkārito on the South Island's West Coast. With a population of just 30, and surrounded by endless forest, mountain ranges and abundant birdlife, along with 300ha of unmodified coastal wetlands, Ōkārito's tidal lagoon is an idyllic place.
"It's down a dead-end road, off the main highway, about 10km, in what's already quite a remote part of the country," says local Barry Hughes. "So, it's not a place that people come across just by chance. People have to make the deliberate decision to turn off and to come down here."
Hughes runs Ōkārito Kayaks, one of only two permanent businesses in town, with his partner, Gemma van Beek. "I would guess that at our peak, we probably had about 3500 kayakers a year visiting Ōkārito. We were the beneficiaries of a growth in tourism without letting it hugely affect the quality of the experience."
Hughes and van Beek began leasing Ōkārito Kayaks in 2014, before finally buying it five years later. It was six months before the pandemic began. "It's probably halved in value since we bought it, but we don't care, it's not for sale. So it only matters what the value is to us, of course. We worked hard, we closed just Christmas Day and on the opening weekend of duck-shooting season, just to give the duck shooters space on the lagoon." They often worked 12 hours a day. "But that was just our nature," says Hughes. "If we weren't doing it here, we'd be doing it on a farm or something."
When the first lockdown happened, it was as if summer had suddenly turned into winter overnight, he says. "In the period afterwards, when we were all just emerging from our shells, we had this absolutely beautiful, serene, quiet town in which to go, 'What are we going to do now?'"
Fortunately, the couple had used the good times to put money away, keeping debt low and saving for the inevitable rainy day. "This was always going to happen, whether it was a pandemic; whether it was a GFC again; whether it was a war. And we all thought war would never happen."
After the initial lockdown was lifted, tourism operators were encouraged to focus on the domestic market. "We began to get Kiwis travelling here. And it was the best; it was the busiest winter we ever had," says Hughes.
To put that into perspective, though, a good month of revenue in winter might be the same as just two days in summer. "So it was never going to save our business, but just that activity and that ray of sunshine of almost every day getting Kiwis coming through the winter, saying, 'We want to get out and support small business. We want to get around supporting the regions, because we know tourism is going to be tough.'"
In the first year after the borders shut, Ōkārito Kayaks survived on 40 per cent of its pre-Covid revenue. That number has since dropped to about 20 per cent. Hughes and van Beek let staff go, guided all the tours themselves, and sold a property next door to the business, previously earmarked to house staff. "In some ways, we've mortgaged our future, because now we have the issue of, well, how do we look after our team in the future? We will have employees again, but we'll solve that problem down the line."
Hughes is preparing for even worse to come. "I'm working on a financial forecast for next year where effectively we have very few international visitors. If we do start to get them back, then that gives us an opportunity. But we are resilient, we are financially resilient. We don't need a lot."
His determination to push on is infectious. "We are the third local family to run and be sustained in this small community by the business and we think, 'Well, there'll be a fourth. There will be someone after us to pass the business on to.'"
The Tourism Export Council of New Zealand forecasts visitors from overseas will return slowly. It expects that by May next year, just 56 per cent of pre-Covid arrivals will have returned to Aotearoa. The council says it could be May 2026 before the industry is back to pre-Covid levels of almost four million visitors a year.
Nigel Hobbs prefers not to put too much weight on forecasts, but agrees they are worrying. "If that's correct, then there's a lot of people, including myself, that might go, 'I don't know if I want to try and wade through the next four years and wait."
Hobbs believes, however, the premium end of the market is likely to return more quickly. "Those people roll their bookings over and just keep it in credit. They're spending a quarter of a million dollars over two weeks in New Zealand, staying in beautiful accommodation, flying business class or private. I believe this market's going to come back within 12 months, and get to its pre-Covid level. I think by the time we roll into this summer, beginning from January, we'll be running at 100 per cent of our pre-Covid revenues. I'm thinking I might need to buy more vehicles and get more guides."
But here's the rub. How does a tourism business cope if the trickle suddenly turns into a flood once the tap is turned back on? A survey by Tourism Industry Aotearoa found that four in 10 of all the people employed in tourism have gone, with a loss of about 90,000 people from the industry. Hobbs is keen to hire new staff, but finding them is the problem. "Right now, every tourism business has an ad out for staff – you go to Seek and have a look."
Of the many who have abandoned tourism, thousands were owner-operators — people like myself and my partner.
"At what point do you throw your eggs back into the tourism basket?" says Liz Lyons. "There's got to be a tipping point, right? You've got to look at the income streams and think, 'Well, yeah, I can live on this now.' So, I think it's going to be in steps and stages."
Many of us have gone on to find other work, careers and passions. I understand how the gamble of returning to tourism is alluring. In Auckland, however, the feeling is one of uncertainty. Earlier this year, the government announced it will release $49 million to tourism businesses in Westland, Southland, Kaikōura, and the Mackenzie and the Queenstown Lakes districts to help them prepare for the return of international visitors. So far, no similar funding has emerged for the rest of the country.
After much soul-searching, Jean Goodbrand and Wayne Eagleton have decided to sell Waiheke Island Wine Tours. They are currently running at about 35 per cent of their normal revenue, but believe there is light at the end of the tunnel now the borders are open again. "The problem is, Kiwis are back at work, they're not out swanning around doing wine tours on Wednesdays and Thursdays," says Goodbrand. "New Zealanders alone cannot sustain tourism. We have to have that international market."
Goodbrand fears some businesses may still not make it. "If you're a summer operator, you haven't put enough away for winter. If you're a winter operator, you might be okay, you might get by. It's going to be the same for hospitality. And then what's going to happen is more people will stop operating and close."
Their sincere hope, however, is that they find someone willing to take up the challenge. “I think it’s going to be incredibly sad. I mean, it was always going to be hard. We were always going to struggle letting go, we knew that. We’ve lived and breathed it. It’s been our life for 10 years and it’s given us a great life.”
