Milford Sound. Photo / NZ Herald
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The tourism sectors' hope for a lifeline may just be days away, after confirmation this morning that an industry relief package will be part of Thursday's Budget.
Speaking at the Epidemic Response Committee this morning, Tourism Minister Kelvin Davis confirmed a package would be revealed on Budget day.
But he offered no details, other than it would help "many, many" tourism and related businesses across the country.
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His indication will come as welcome news the thousands working in the industry, who have been crying out for more support.
A survey by the Tourism Industry Aotearoa revealed that 93 per cent of all tourism operators have taken up the wage subsidy scheme.
But for many, that has not been enough.
MPs on the committee this morning were told this by all of the submitters.
Without more targeted support and the extension to the wage subsidy scheme, Director of Event Impressions Jeff Alexander said he will likely be out of business.
It's a similar story for Sounds Air, whose managing director Andrew Crawford said this morning the airline won't be able to survive without more support.
And for some, even with a wage subsidy extension and a targeted support package from the Government, it's already too late.
Sudima Hotels Chief Operating Officer Les Morgan said the hotelier has had to cut its staff by 80 per cent because of Covid-19.
Before the pandemic, Sudima had 550 employees – that's now just 110.
And the hotelier is down to just 20 per cent revenue, compared to pre-Covid days.
That revenue is almost solely coming from the Ministry of Health, who are paying Sudima to quarantine people infected with Covid-19.
"We're hanging on by a tenuous thread."
Davis' revelation that a support package is coming on Thursday will come as welcome news to Tourism Industry Aotearoa chief executive Chris Roberts.
And he said there will be a "wave of people" laid off in June – when the wage subsidy scheme expires, if not enough support is offered in the Budget.
Current estimates put the expected job losses in the sector at 100,000, if not further support is provided.
Meanwhile, the sector is focusing on rebuilding.
At level 2, domestic travel is allowed in New Zealand – most submitters on at this morning's hearing welcomed that.
But Haka Tourism Group General Manager Eve Lawrence said that this simply won't fill the international gap.
She was highly sceptical about the domestic tourism campaign, saying it would only bring in around 20 per cent extra revenue.
"It's like calling in an architect instead of the fire service while it's burning down."
She said the Government needed to focus on saving the tourism sector, before redesigning it by focusing on domestic tourism.
Tourism Industry Aotearoa Chief Executive Chris Roberts says right now, it's all about survival for the tourism sector.
He was appearing before the Epidemic Response Committee which was hearing from key players in the tourism sector.
He said 40 per cent of all hotels in New Zealand are closed and job losses range from 55-85 per cent across the hotel sector.
Roberts says 100,000 jobs will disappear in the tourism sector and there will be a "wave of people" laid off in June – when the wage subsidy scheme expires, if not enough support is offered in the budget.
Tourism Minister Kelvin Davis told the committee these are "unprecedented times" for New Zealand.
The Government has had to make many significant decisions in a short amount of time.
He said the tourism industry has "been hit hard" but he said the Government would not be able to save every job.
Davis said the Government was working on a response package for the tourism sector.
He said the update of the wage subsidy scheme has been substantial in the tourism sector.
"Make no mistake; tourism will not be the same globally."
But he said because of the Government's action, New Zealand is in a better position than most.
He confirmed, on Budget day a tourism response package will be announced but he would not go into detail about what was in it
Chris Roberts earlier told the committee the Government's decision to allow domestic travel in level 2 will save thousands of jobs, however, this will not be enough to save the sector.
Although good news, with the fate of many events across the country still uncertain, that will put a dampener on overall travel numbers.
Roberts said most tourism operators have suffered at least a 70 per cent loss in revenue.
As well as an extension of the wage subsidy scheme, he called for a fees holiday for operators and a more targeted scheme.
He said the Government needed to concentrate on helping to boost domestic spending.
The Government needs to provide as much clarity around the opening of the borders.
"We're not going to see any substantial tourism activity until at least October."
He called on Government departments to not cancel their small meetings and conferences later in the year and asked for more clarity around gathering rules.
Managing Director of Picton-based Sounds Air, Andrew Crawford, also appeared before the committee and told MPs the business wouldn't survive without more Government help.
The business was facing $500,000 a month in costs, but no revenue.
Crawford told MPs his business will not be able to survive without more Government support.
Sounds Air has 85 employees and has taken up the wage subsidy scheme.
"These are very difficult times," Crawford said.
Even going into level 2, the business is still hurting. This is despite the Sounds opening up for bookings again this morning.
There are promising early signs, he said, and Crawford is hopeful demand will continue.
In level 2, he said passengers will need to wear face masks on Sounds flights – those will be provided by the airline. He said this was despite there being no advice from regulators to do so.
Crawford was open to working with Air New Zealand as the sector starts to open up again, but he has not been able to talk to the airline yet.
Asked what he wanted to see in Thursday's Budget, he said it was very important that the wage subsidy scheme continued.
Managing Director of Pan Pacific Travel Matt Brady also appeared, telling MPs that sadly, the business might have "met its match" in Covid-19.
He said Pan Pacific, like many other operators, was operating with zero revenue.
"We cannot survive 12 months without significant help," he said.
That sort of support will have to be targeted – that means the wage subsidy and more support on top of that.
Brady said as soon as Prime Minister Jacinda Ardern said in a media conference that borders would be closed for a "very long time" he saw a wave of cancellations.
A major issue for him, and other tourism operators, was the lack of certainty.
He called on the Government to set out a concrete timeline on the reopening of the borders.
He said he was hopeful of an upturn in the future, when potential overseas visitors looked for holiday destinations, but he said that would be a long time away.
Sudima Hotels Chief Operating Officer Les Morgan told the committee that the hotelier has had to cut its staff by 80 per cent because of Covid-19.
Before the pandemic, Sudima had 550 employees – that's now just 110.
And the hotelier is down to just 20 per cent revenue, compared to pre-Covid days.
That revenue is almost solely coming from the Ministry of Health, who are paying Sudima to quarantine people infected with Covid-19.
"We're hanging on by a tenuous thread."
He's asking the Government for zero interest loans for another four or five years.
In fact, he said it could take up to four to five years for the hotel chain to get back to pre-Covid days.
He's asking for targeted assistance, as well as an extension of the wage subsidy scheme.
Morgan was also looking for some rates relief – "we pay a lot of rates".
NZ Māori Tourism chief executive Pania Tyson-Nathan called out Tourism Minister Kelvin Davis for comments he made that were potentially hurtful for the sector.
"We're both not good at public speaking," she said when asked about the minister's comments.
Davis had previously said that now was not a good time to start a tourism company.
Tyson-Nathan said she disagreed with those comments.
She said the Government needed to be doing more for tourism, not the opposite.
In fact, she said, a lot of Māori tourism operators were hurting.
She said a lot of operators are repurposing their businesses and some businesses which used to be rivals were now working together.
But, she said, there was still optimism – "A lot of people see hope in the future."
She called on the Government to do "everything it can" to create a buffer for the sector.
"We need the wage subsidy," she said, adding that there were "significant" liquidity issues.
Meanwhile, she urged MPs to look into compliance costs, as that was hurting a lot of operators.
"What we need is a year off, not a year to pay them off," she said of compliance fees.
It was the same with things like health and safety regulation costs.
She said she was "mortified" at the kind of costs businesses have to pay.
These costs work against productivity, she said.
When asked about job losses, Tyson-Nathan said she had talked with leaders in the hospitality sector, who estimated between 51,000–68,000 job losses.
This was a worry for her, as hospitality was a "huge employer" of Māori.
She gave the example of job losses from Sky City.
After the borders closed, the industry essentially ground to a halt, she said.
And with Prime Minister Jacinda Ardern's indications that the borders will stay closed for the foreseeable future, the sector will continue to feel pain.
Haka Tourism Group general manager Eve Lawrence said the sector was hurting due to the border closure.
She was highly sceptical about the domestic tourism campaign, saying it would only bring in around 20 per cent extra revenue.
"It's like calling in an architect instead of the fire service while it's burning down."
She said the Government needed to focus on saving the tourism sector before redesigning it, by focusing on domestic tourism.
For example, Lawrence said, the wage subsidy scheme needed to be expanded and without it, things would get even worse for the sector.
Haka Tourism Group has 184 fulltime employees – without the border reopening or the wage subsidy scheme extension, Lawrence said they would have to slash 171 jobs.
She said tourism businesses cannot operate with zero revenue.
"We need to be supported until the borders can reopen again."
She said operators were "incredibly worried" about getting to the end of the year – particularly accommodation providers.
She said commercial rent reductions needed to be on the table, or many more operators would fail.
Lawrence called for the "bed-tax" to be axed until at least the end of the year.
Director of Event Impressions Jeff Alexander said all his operations had seen eight weeks of no revenue.
This has been dire and without further Government support the events-planning industry will be in serious trouble.
Alexander, like many in the sector, was planning for the 100-person limit at level 2.
But yesterday, it was announced that the limit was just 10.
He said yesterday's announcement "pulled the carpet from right under us".
He said all non-essential services have been cut from his business and he was working on a survival plan.
"For us ... we are struggling with the business fixed expenses."
He said that was not covered by the wage subsidy – which does not cover the full cost of paying his staff.
Although the sector was pleased to see movement down the alert levels, there was still too much uncertainly for many people.
This means bookings have not picked up.
He called on government agencies to work with event planners and to not plan events internally – "now is the time for professionals".
MPs are hearing from a range of affected businesses and groups, such as NZ Māori Tourism, Sounds Air, Sudima Hotels and Tourism Industry Aotearoa.
"We're heading towards a deep recession and our economic recovery plan is going to be of immense importance," Simon Bridges said.
Today's hearing comes just days before the 2020 Budget – or, as Finance Minister Grant Robertson has dubbed it, the "recovery Budget".
Tourism operators and businesses will have high hopes that there will be a support package for them amongst the billions of dollars of new spending likely to be announced.
• Covid19.govt.nz: The Government's official Covid-19 advisory website
Committee agenda:
• Pania Tyson-Nathan, chief executive of NZ Maori Tourism 10am – 10.15am
• Eve Lawrence, general manager of Haka Tourism Group 10.15am – 10.30am
• Jeff Alexander, director of Event Impressions 10.30am – 10.45am
• Andrew Crawford, managing director of Sounds Air 10.45am – 11am
• Matt Brady, managing director of Pan Pacific Travel 11am – 11.15am
• Les Morgan, chief operating officer of Sudima Hotels 11.15am – 11.30am
• Chris Roberts, chief executive of Tourism Industry Aotearoa 11.30am – 11.45m
• Kelvin Davis, Tourism Minister 11.45m – 12.05pm
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