Covid 19 coronavirus: Hotel Council Aotearoa says lockdown a big blow

Hotels already on their knees because of border closures are suffering a series of fresh blows due to the Auckland lockdown and elevated alert level around the rest of the country.

As soon as the lockdown was announced on Saturday night bookings dried up and were cancelled, says Hotel Council Aotearoa.

”’The obvious impact from lockdown revenue goes to zero during that period. And the tragedy of hotels is that we cannot stockpile yesterday’s unsold hotel rooms – it’s like throwing away a portion of your crop each and every single day,” said the council’s strategic director, James Doolan.

The push to get Kiwis to Auckland for the America’s Cup is now in limbo with uncertainty over the start date to racing and a further blow to confidence to book travel ahead.

”A lot of business just comes off the books. And that happens immediately. When you have theseperiodic flash lockdowns it starts to change people’s buying behaviours.”

The biggest source of domestic travel dollars – Auckland – was hitting the whole country. The current strict restrictions on domestic travel out of Auckland mean hotels in other centres are also suffering at a time when travellers without work or school commitments have been targeted by marketing campaigns to get them out of the city.

Dolan said hotels throughout the country were losing money fast.

Staff and property-related costs such as finance, insurance and fixed utility charges carried on.

Figures for last year showed hotel revenue plunged by more than 40 per cent as room occupancy was half of what it was the year before.

”We’ve got a lockdown and we don’t know when the end date is so anyone for the next two or three weeks is probably cancelling their booking now.”

Key to the recovery of the sector was reopening of borders with a travel bubble with Australia the first, important step to sustain what he called a backbone part of the tourism sector.

Pre-Covid in the year to March 2019 international visitors stayed 17.3 million nights – 43 per cent.But they outspent locals, making up 57 per cent of spending on short term accommodation.

Stats NZ figures show arrivals from Australia and the Pacific to March 2020 totalled 1.6 million, about 46 per cent of all overseas visitors which he said showed what a ”game changer” an Australian bubble would be.

Dolan said the hotel sector needed a clear line of sight as to when a two-way transtasman bubble could open.This country would face strong competition from others as borders reopened.

Tourist destinations around the world were assessed and compared on the
relative strengths of their tourism backbone, including what airlines were like, how safe it is to get around and how good are the hotels.

”New Zealand is blessed with fantastic scenery and natural resources. However,
without the right kind of tourist backbone, we cannot leverage those natural advantages to attract high-value international tourists.”

Dolan said the pivot to domestic was never a long-term solution.

”Hotel product is geared towards the needs and tastes of international guests. New Zealand has a material excess in accommodation supply if international guests are prohibited from coming here.”

A sudden excess of supply leads to decreases in price, which compounded the problem.This would be exacerbated when managed isolation and quarantine (MIQ) hotels were available again for normal use.

Just on 10 per cent of the 330 hotels with 30 rooms or more were part of the MIQ programme.

In a wish list for the Government he said his council wanted:

• Recognition that hotels, while privately owned, are key tourist infrastructure alongside Air New Zealand,airports and domestic transport infrastructure – international guests judge a country by the quality of these “tourism backbone” assets, not by whether or not campervans have toilets.Hotels (like Air New Zealand) market internationally and will be critical to attracting people back to New Zealand as normal travel conditions return.

• To understand the timelines/preconditions for opening of an Australian bubble initially, and other countries after that.

• Hotel sector-specific support to help save jobs until borders reopen.

• Ten-year loans at low interest to allow hotels to cover ongoing fixed costs, or to facilitate hibernation, until borders reopen.

• Local and central Government to recognise that now is not the time for new, hotel-specific taxes and rates.

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