Tourism Industry Aotearoa chief executive Chris Roberts outlines the 10 measures that will ensure the short-term survival of the industry, while it waits for New Zealand’s borders to re-open.
It has been a roller coaster ride since February 2020 for the country’s 35,000 plus tourism businesses. Border closures were necessary but a huge blow. The opening of the Tasman travel bubble in April 2021 lifted spirits but the outbreaks in Australia and the shutting down of Tasman flights meant the benefits were temporary and minimal.
Kiwis have been our saviours. There’s been a huge range of individual business outcomes – from closure or hibernation, to record revenue levels for a fortunate few. But overall, tourism businesses delivering services to a domestic market had been doing okay prior to the August outbreak. Domestic travel for leisure and business was buoyant, accommodation occupancies were steadily increasing, and a strong programme of events and conferences was underway. The July school holidays had generated good business. The biggest issue, other than the closed border, was a shortage of workers.
Domestic travel was stopped in its tracks when New Zealand moved to Covid-19 alert level 4 on 17 August. Almost every tourism business is using the wage subsidy to hang on to their staff, and the Resurgence Support payment to partially meet fixed costs. But the losses are quickly mounting. Businesses outside of Auckland were relieved to get back to level 2 on 8 September but visitor activity remains low. And for those in Auckland, there’s no business at all.
Tourism operators tell us the impact of the lockdown is very different from last year. The March 2020 lockdown came towards the end of the peak season, when operators had cash reserves to draw on. This time it’s unclear how quickly domestic tourism will bounce back. The biggest domestic market, Auckland, remains unavailable and with summer around the corner New Zealanders may delay any leisure travel until the Christmas holidays.
Operators are tiring. We’re now 18 months into the pandemic with no certainty on when we will emerge to the ‘new normal’. Operating a tourism business with closed borders and changing alert levels is incredibly hard. Revenue dries up overnight. The mental wellbeing of many operators is being impacted, severely for some. Anger and grief are common emotions. Some have made the hard decision to close.
However, tourism people are very resilient. They know we have an amazing visitor offering here in Aotearoa. Most are determined to survive, revive and then thrive again. But they can’t do that on their own.
Tourism is a complex ecosystem with multiple players. This includes government as both a steward, looking across the whole tourism system to make sure that it is working effectively, and as an actor directly through its own assets and interventions. The private sector has a few larger players but is dominated by SMEs and micro-businesses. It is locally owned, and in recent years increasingly Māori owned and operated. There are embedded inter-dependencies, with tourism businesses reliant and supportive of each other.
As tourism looks to survive the current challenges and return to its previous levels of contribution to New Zealand’s economic and social wellbeing, it will need a range of solutions that protect essential parts of the tourism ecosystem. Mass business failures will create gaps in the overall offering, making the road to recovery much more difficult and retaining the strength of the New Zealand brand highly problematic.
If businesses are supported, tourism can recover faster, supporting more jobs for New Zealanders and making a greater contribution to New Zealand’s prosperity. The difference between a patchy recovery and a strong recovery is significant.
TIA has identified 10 priority survival steps for tourism. Some are led by government, some by industry. Some are underway. All require partnership. Put together, they can get us through the biggest crisis our tourism industry has ever faced.
Few tourism businesses met bank criteria for last year’s Business Finance Guarantee Scheme, as they were unable to show what future revenue will be under a ‘normal’ scenario. It would be helpful to have a re-aligned loan scheme designed for SMEs.
TIA is also looking to partner with government on longer-term strategic initiatives, including the proposed Tourism Industry Transformation Plan; TIA’s Tourism Sustainability Commitment; the TRENZ international trade event; and the government funded/industry led Go with Tourism initiative.
These initiatives all support the development of a sustainable tourism industry that delivers for Aotearoa and its people, while the 10 measures above will ensure the short-term survival of the industry.
7 Apr 2021 Wednesday Letter: The beginning of the end