STATE OF THE NATION
LEADERS FORUM
Road Mapping A Bumpy Future The shape of the hospitality industry may change forever as a result of the events of 2020. By Marisa Bidois – CEO Restaurant Association of New Zealand.
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eeing revenues rise and fall over the year and watching our hospitality members try to get back on their feet under the most challenging and uncertain of conditions has fuelled our work at the Restaurant Association. 2021 will see that focus continue as we assist the industry to recovery from a year like no other. We are all too aware that preparing for future operational success will need to be conducted carefully and with a plan to continue to adapt in the future if necessary. Targeted support will be crucial for the industry’s recovery The year ahead will present many inevitable challenges, including fewer
tourists and international students, low consumer confidence, rising unemployment and reduced access to skilled labour. Support from the Government will be crucial for the industry’s survival and we will continue to strongly advocate for Government to provide the targeted assistance that is required for the industry’s sustainability and recovery. We were pleased to see some targeted support come through via the partnership with MSD and the Springboard initiative, however more assistance is needed. Throughout 2020 we were calling for a number of urgent actions, including rent relief and small business grants to assist those businesses most affected to
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address the economic challenges of 2021 While we are currently enjoying no community transmission, in 2021 a new outbreak in New Zealand is still a major concern for members. The majority of our industry is made up of small owner operator businesses that cannot sustain ongoing closures and restrictions without Government support for wages, leases and other costs. To front foot any potential returns to heightened alert levels, the Restaurant Association has presented a proposal to Government of alternate guidance and measures at each alert level. This will enable businesses to operate whilst still maintaining the health and safety of customers, workers and visitors to the premises. In our
STATE OF THE NATION challenging to recruit for skilled staff, particularly as businesses again needed to increase their teams for the busy Summer season. A recent Restaurant Association survey showed that 78 per cent of hospitality businesses trying to recruit skilled workers are finding it difficult to do so. Our staffing shortages are one of the biggest stressors for operators as businesses can’t always operate to full capacity. Often there is a need to reduce operating hours, and in extreme cases, businesses have had to close due to the lack of staff. Until this year around a third of the industry has been made up of a migrant workforce living in New Zealand on temporary work visas. Covid-19 has now made it necessary to reset the employee pathway as these workers are now largely inaccessible to us. The Association already has a number of recruitment and retention programmes underway, such as HospoStart and a new Springboard training programme, which will roll out in 2021, both in partnership with the Ministry of Social Development. We would like to see more employerled training opportunities supported by the Government, with the Association expeditiously recalibrating work plans to include the building of long-term capability and improved resilience training across our industry.
“In 2021 we will continue to lobby and advocate to ensure the voices of our industry are heard regarding key legislative policy and changes.”
By Marisa Bidois – CEO Restaurant Association of New Zealand
proposal we make recommendations for fiscal support to be tied to each alert level to provide our businesses with the ability to plan, knowing what assistance will be available. Ensuring those in positions of influence are hearing the voice of the industry In 2021 we will also continue to lobby and advocate to ensure the voices of our industry are heard regarding key legislative policy and changes. Some of the most pressing issues for our industry include immigration reform, vocational education, minimum wage increases, fair pay, merchant fees and more. Despite the challenges presented by Covid-19 in 2020, it remained
The road ahead is going to be a bumpy one, but there are also opportunities. Operators identify New Zealanders supporting local businesses and building deeper relationships with customers and our communities as two of the most significant opportunities for their businesses over the next 12 months. To help build connections with customers, the Association supports the work the Government is doing to rework New Zealand’s food story. The hospitality sector is an important part of this story and in 2021 the Association wants to continue to ensure that we are included in these conversations. We are seeing a rise in conscious consumerism: where customers are driven not by prices or flavours alone, but the origins of their food. Every rohe in Aotearoa has its own food identity. We see pride across
the country in locally grown produce and food experiences with whakapapa interwoven back to the region. We need to carve out intrinsically Kiwi dining experiences that speak to our culture, our whenua and our produce with an accompanying narrative of pride that we relentlessly repeat, through every channel available to us. Targeted investment into telling these community stories will broaden the tourist experience and support the unique nature of manaakitanga in Aotearoa. The Restaurant Association aims to continue to be positioned to be part of the discussion on behalf of the industry to promote domestic and international tourism. Creating an Industry Roadmap for the Future The implementation of the Association’s Hospitality Roadmap is a key focus for 2021, which we will work on collaboratively with different parts of our sector and the Government to create a concise pathway for rebuilding and repositioning the sector for the future. The Roadmap sets out our action plan for the industry for the next three years which includes the following: • Create workable solutions for legacy issues faced by the hospitality industry. • Continue to work on partnerships between industry and government. • Support the development of fit for purpose, adequately funded education and training options that produce ready to work, productive, career focused workers. • Recreating our national narrative to improve perceptions around our industry as a career. Now, the single most important issue for the hospitality industry is the sector’s recovery. In planning for the immediate future, operators will need to fiercely protect their cashflows, be ruthless with expenses, be imaginative marketers, and be hygiene experts, all whilst retaining the heart of New Zealand hospitality that the industry is renowned for. It will be no easy job but the Restaurant Association is laser focused on assisting the industry to become stronger and more resilient. Our restaurants and cafés and bars are not only places to experience our incredible food and beverage products but also places to find the joy in human interaction and experience. Our operations offer an antidote to the turmoil going on around us - and this is exactly what the world needs right now. ■
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STATE OF THE NATION
LEADERS FORUM
Mayor of Auckland, Phil Goff.
28 FEBRUARY 2021 - HOSPITALITY BUSINESS
STATE OF THE NATION
Long Term Challenges & Successes Ahead While COVID-19 has created a range of challenges for Auckland, 2021 is still set to be a bumper year for the city, Mayor Phil Goff writes.
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year ago, we were looking forward to 2021 being Auckland’s biggest year ever. We were gearing up to host a slew of national and international sporting, cultural and business events that were expected to draw tens of thousands of visitors to Tāmaki Makaurau from around the world and showcase our city on the global stage. Unfortunately, before the Year of Auckland kicked off, the COVID-19 pandemic threw the world into chaos. As I write this, global deaths have just passed 2 million and confirmed cases have reached more than 94 million. In New Zealand, we are fortunate that a strong health response—widely supported by the public—has meant that we have avoided a widespread outbreak, which would have overwhelmed our healthcare system and potentially cost thousands of lives. We have been able to enjoy summer essentially free from restrictions within our borders. While the overall economic effects have been less severe than initially feared during the early months of the pandemic, many businesses have suffered, particularly in the tourism and hospitality sectors, which have been especially hard hit by the lockdowns and lack of international visitors. The pandemic has also had a significant impact on council revenue. Around 60 per cent of council income comes from non-rates sources such as concerts and visitor attractions, operations at Ports of Auckland and dividends from Auckland Airport shares. All these sources of income have taken a big hit from the lockdowns and border closures, with forecasts indicating that the losses for council could be up to $1 billion by 2024. In response, we have been significantly cutting expenditure and reducing staff numbers to make the council a leaner and more adaptable organisation. Recognising the pandemic’s impact on travel and tourism, we suspended the
Accommodation Provider Targeted Rate; we also offered rates postponement for residential and business ratepayers financially impacted by COVID-19. The longerterm financial impacts will require further tough decisions in our upcoming 10-year Budget— the Recovery Budget—which is out for public consultation from 22 February until 22 March. We need to find more savings and efficiencies while continuing the investment in transport, housing and environmental infrastructure that our city needs and providing the essential services that Aucklanders rely on. We also need to address the challenges posed by climate change, which will be even more severe than the COVID-19 crisis if we do not act now. While it’s important to tackle these challenges, we should also celebrate the successes our city has been able to enjoy. Our COVID-free status meant that tens of thousands of people from across Auckland and throughout New Zealand turned out to watch the Christmas races and the PRADA Cup, with more expected for the America’s Cup races starting in March. Millions more watched broadcasts screened in more than 100 countries, and the crowds, fantastic weather and beautiful location will have been a stunning advertisement for Auckland to those watching from around the world. Vibrant new public spaces are opening across the city, including Te Komititanga, the people-friendly civic square next to Britomart Station; the upgraded Galway Street precinct,
Ūrunga Plaza on the Amey Daldy Park and the Daldy Street Linear Park near the waterfront. The Chief Post Office building entrance to Britomart is due to open in March and Te Wānanga— the new downtown public space between Princess Wharf and Queens Wharf— will open later this year. In the longer term, the City Rail Link, which is now well underway, will transform Auckland’s transport network when it opens in 2024. It will move the equivalent capacity of three Auckland Harbour Bridges or 16 extra traffic lanes into the city at peak times, carrying more than 54,000 people into and around the city, slashing train travel time for passengers and freight and reducing congestion for those who do choose to drive. These and other projects are transforming our city into a more people-friendly place, a destination in its own right that is more enjoyable to spend time in and which will draw visitors from around Auckland, New Zealand, and— eventually—around the world. Undoubtedly, Auckland is facing challenges that we could not have predicted a year ago. But we are continuing to invest in the important infrastructure that our city needs to be a truly world-class place to live, work, visit and invest in. This investment is helping to stimulate economic recovery from the COVID-19 crisis and, when the national borders reopen, will ensure we are able to resume our role as New Zealand’s global city and our gateway to the world. ■
“The longerterm financial impacts will require further tough decisions in our upcoming 10-year Budget—the Recovery Budget—which is out for public consultation from 22 February until 22 March.”
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STATE OF THE NATION
Remembering the Heart of Hospitality Our industry is renowned for innovation and change By AUT Head of Hospitality and Tourism School, Dr Warren Goodsir.
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hat’s one of its many strengths. As I write this we are enjoying a community free of COVID-19, having contributed to a Christmas shopping spree that set new spending records, attended and participated in bookedout festivals that swelled holiday spots and filled cafés. We could be forgiven for thinking that COVID-19 has come to its end. Yet, beyond those summertime allures and despite the promise of a vaccine, COVID-19 continues to unfold in mostly unsettling ways. COVID-19’s impact has, as we well know, caused widespread disruption to the tourism and hospitality industries. Balance sheets remain shredded and hospitality business owners and employees, like everyone else, wonder ‘what’s next’? While we cannot predict the future, a few themes remain constant over time and will stand our industry in good stead for the uncertain year ahead. The first and most obvious one is how good we, as New Zealanders in hospitality, are at innovation and
adaptation. That innovation became a timely exemplar and tasty newobvious in the lockdowns when dining options. businesses who usually relied on These attributes are manifest in inhouse dining adapted to contactless the recent spate of new hospitality takeaways and other ways of openings, despite COVID-19’s threat, connecting with local communities and the return to Aotearoa New to keep the cash registers ringing. For Zealand of some of our best chefs. some creative hospitaliers, COVID-19 Those openings and chef returns became just another challenge. For reflect the Kiwi attribute of ‘punching others it was a devastating experience above one’s weight’, by making positive that this summer-season of spending strides in the face of adversity. locally helps to address. Within that amalgam, hospitaliers Secondly, COVID-19 has realised are walking a fine line by balancing the abundance and primacy of New the business need for profitability Zealand products and produce, alongside a wider view, incorporating challenging perceptions of luxury social and community wellbeing. imports. Many chefs have long known It could be the greatest lesson from this, but consumers are now looking COVID-19, that delivering hospitality, and buying local – something that can in hotels, restaurants, bars, and café, only be good for our industry. or by remote delivery, is really about Additionally, consumer desire to creating meaningful connections within eat locally prompts exciting communities. That’s something Kiwis food that blend cultures in are good at, and a characteristic not new and exciting ways. only to be proud of, but one that will The popularity of see us through the good, and more “… 2020 saw classes fusion Korean food difficult times, with good grace. recorded and delivered in Auckland, and Institutions like AUT, and online so students could the rest of the its School of Hospitality and country, provides Tourism, have not been engage in self-paced learning. immune to COVID-19’s impact. Like industry, AUT has fostered The university has endured a sense of student and staff redundancy-based restructuring, community, something that and the number of international students has plummeted. Like the touches upon hospitality’s hospitality industry itself, AUT basic ethos…” has experienced significant financial difficulty. However, like industry, we continue to innovate. Much of 2020 saw classes recorded and delivered online so students could engage in self-paced learning. Like industry, AUT has fostered a sense of student and staff community, something that touches upon hospitality’s basic ethos: the care of others. LEADERS FORUM While 2021 began in a promising way, with a vaccine on the horizon, one thing we can all celebrate and rely upon, should things turn down, are our basic Kiwi attributes of innovation, determination and looking out for each other. Whatever this year brings, let’s all consider the base of hospitality. Let’s all care for one another. ■
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STATE OF THE NATION
Optimism Despite the Dark Clouds I cannot think of any part of the economy that wasn’t affected in some way by the COVID-19 pandemic and the lockdowns of 2020. By Hospitality New Zealand CEO, Julie White.
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ome parts were obviously hit a lot harder than others, with hospitality and tourism (very often inextricably linked) at the very top of that list. For many businesses and people in those two sectors, Covid-19 has been devastating. You can’t turn off the tap of four million overseas tourists a year and expect anything else. There was never any way our small population could replace the hundreds of millions they brought in. There have been many business closures and many job losses, many unlikely to return. We have lost some wonderful, clever, hard-working people. And I fear the pain is not done with yet. Because while most of the economy is getting back to normal, the recovery for two industries has been very slow and continues to be so. Despite expectations the absence of further community outbreaks leading into Christmas and the summer holidays would signal the start of the way back, the reality is something else. As I write, in the middle of January, so far summer has not been the silver bullet most were hoping for. On top of that, the hoped-for trans-Tasman bubble flagged for March was dealt a blow by the arrival of the new variant in the community in Australia. The international tourism hotspots Auckland CBD, Queenstown and West Coast are most at risk. But we are an optimistic bunch, and as much as the 2021 horizon looks like a version of 2020, there is a glimpse of more optimism. That comes in the form of a trans-Tasman bubble and the global vaccine rollout. I have no doubt a bubble will happen, it’s just a matter of when. The key is in the hands of the Government and the balancing act of the health response and economic recovery it must perform off the back of the new variant. The importance to our prosperity of an open Tasman cannot be overstated.
As for the vaccine, remember last year there was doubt we would have a vaccine within two years, let alone just months, and its rollout, not just here but around the world is key to survival in so many ways. Fingers crossed and let’s all keep doing the right Covid things. In the meantime, resilience will be key this year for hospitality operators, starting with a Covid BCP (Business Continuity Planning). The new normal is constant change and adapting, and working with assumptions and uncertainty. Adapting to maximise the peak seasons will be as important for business owners as will be scaling back operations during the softer periods. Increasingly important are strong supplier relationships and support to control upward cost pressures from supply chain issues. For hotels that have MIQ business, the new 5-star rating assurance for guests will be cleaning standards. There will need to be greater focus on domestic marketing
“The new normal is constant change and adapting, and working with assumptions and uncertainty.”
and a deeper understanding of these markets to capture bookings – a one-size-fits-all approach will not have the cut-through – as well as on revenue generation and balance sheet management, including new ancillary revenue initiatives, supplier contracts, stock control, improved productivity, and doing more with less. Hospitality NZ has been involved in two recent initiatives that will go a little way to easing the pressure on business. I would like to think our submissions to the Government helped in some way to extend visas of vital sector workers for an additional six months, and we will continue to push for further changes. The industry-led Hospitality Springboard programme kicked off and we believe it will be key to attracting, retaining and upskilling more Kiwis into hospitality as the borders remain closed to our usual migrant workforce. Building a workforce for the future will be an all hands on deck approach, not a quick fix but well worth the investment for the sustainability of our industry. ■
Hospitality New Zealand CEO, Julie White
LEADERS FORUM
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LEADERS FORUM
The seafood allegory has some resonance for my next challenge – the tourism industry. - Stuart Nash 32 FEBRUARY 2021 - HOSPITALITY BUSINESS
STATE OF THE NATION
We Must Stay On Top Of The Virus
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This time one year ago, the New Year dawned with an ominous warning for a vital sector of our economy. By Minister for Economic and Regional Development, Forestry, Small Business and Tourism, Stuart Nash.
’m not referring to tourism, but to our $2 billion a year seafood export industry. In my former role as Fisheries Minister, the first major challenge in 2020 was the collapse of our rock lobster industry. Chinese New Year celebrations were abruptly curtailed as a mysterious new virus swept out of Wuhan and terrified the population in one of our most important export markets. Our premium crayfish, a valuable part of our brand identity for discerning consumers, was off the menu as traditional Chinese New Year family gatherings and internal travel was cancelled for millions of people. Then our borders closed too. For the record, our seafood exports took a big hit in 2020, down more than five per cent, and are forecast to fall by around one per cent this year. But in 2022, they are expected to increase by more than ten per cent. Risks remain, especially getting product to China, the destination for one third of our seafood exports. The seafood allegory has some resonance for my next challenge – the tourism industry. 2021 will still be dominated by COVID19. The virus is mutating. Our job is to make sure that everything we do – including tourism and broader economic policy – has a single focus. We must stay on top of the virus. That requires ongoing vigilance not just from government, but from businesses and the wider community. In short, from the team of five million. We are working very hard to make travel bubbles or safe travel zones a reality. The vaccine is only one part of it. The immunisation programme marks the beginning, not the end. The virus will not simply disappear after one round of the vaccine. We need widespread vaccination across the population to achieve the desired level of immunity. Our plans for safe travel zones with Australia have been set back by the community outbreaks in some states. That re-sets the clock. It is a bottom line to require 28-days free
of community transmission. We are working closely with Australian government to ensure we have the best information about the safety and effectiveness of the vaccine. We are also under no illusion about the potential risks of the eventual safe travel zone with Australia and our Realm countries in the Pacific. Freer travel from there will ultimately mean fewer staying in our managed isolation hotels. This will free up spaces for more people to return – and they will be from higher risk countries. Additional offshore measures including pre-departure testing will help us prepare for the increased risk such arrivals will bring to our facilities and to incoming flights. We are in a good position with no community cases, but we continue to take very specific steps to further strengthen our borders in response to what we see overseas. Strict protocols will remain in place. We regularly review our settings and make changes where they will make a difference. Growing travel restrictions are being imposed in countries that host airport hubs and by airlines themselves – which block routes to New Zealand for the overwhelming majority of travellers from higher risk countries. There are some bright spots on t he horizon. In early January the international credit rating agency Fitch affirmed our AA+ rating and praised the Government’s policy framework. It said the robust public health and economic response to the global
“Our priority remains to keep people safe, accelerate the economic recovery, and help to get more businesses back on their feet.”
COVID-19 pandemic enabled New Zealand to weather the economic shock exceptionally well by global standards. The economic bounce back was a result of our decision to act swiftly during the COVID-19 pandemic. We supported 1.8 million workers through the Wage Subsidy Scheme and invested billions in infrastructure, training and creating jobs. We invested heavily in both the promotion of domestic tourism and direct support to tourism businesses to help drive the economic recovery. While there are vaccines being rolled out in countries seriously affected by COVID-19, the world is by no means out of the woods yet. There is still a huge amount of global uncertainty in the face of new strains of the virus and continued struggles in many countries to contain COVID19 domestically. In short, we have a very big year ahead of us. Our priority remains to keep people safe, accelerate the economic recovery, and help to get more businesses back on their feet. It is hard, it requires a clear focus, and it is a team effort. Tourism and hospitality businesses are doing their part by encouraging customers to scan QR codes, promoting good hygiene practices, and telling workers to stay home if sick. We are hopeful and optimistic, but a lot of work remains ahead. ■
Stuart Nash, Minister for Tourism.
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STATE OF THE NATION
COVID-19 Demonstrated the Importance of Tourism to New Zealand
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Tourism recovery through 2021 will be a challenging process. By Chris Roberts, CEO Tourism Industry Aotearoa.
s the summer holidays draw to an end, many people are wondering how tourism has fared. The most optimistic among us will be hopeful that the surge of domestic travel over the Christmas break has done enough to buoy the industry until our borders safely open. And it’s certainly true that Kiwis have taken on the challenge this summer, getting out and supporting local. The traditional Kiwi summer holiday spots seem to have done well, with domestic travellers drawn to our beautiful beaches and lakeside towns. Visitor numbers have been as good or even better than usual in some regions. The new alternative ‘island trips’ have all been booming – Stewart Island, Chatham Islands and Great Barrier Island reported “With border record numbers of visitors. restrictions in Parts of the country where New Zealanders place, the missing don’t traditionally COVID-19 has international visitor spend go for their summer perversely served holidays have struggled, will be another $1.5 billion to demonstrate though. Fiordland and the importance of per month for February Westland need more tourism to New and March. In all, a support. The main Zealand. With centres have also been borders closed, we’ve $6 billion hole in quiet with no international experienced what the summer.” visitors and city folk heading loss of visitor demand off to their baches. Auckland actually feels like around the has been attracting a few yachting country: to regional economies; enthusiasts for the America’s to the many thousands of tourism Cup racing, but not significant businesses; and to all those numbers. people who have lost their jobs Despite the contribution in tourism or in the sectors that LEADERS FORUM of Kiwi holiday makers, there support tourism. is no making up for the loss of It’s not all doom and gloom. international visitors, who last We don’t know when, but we know summer spent over $3 billion during there will be an end to the pandemic. December and January. TIA has a progressive and ambitious Tourism operators have focused on view of the future of the tourism giving Kiwis a great holiday experience industry in Aotearoa. We firmly but are looking nervously ahead to believe New Zealand can lead the world in sustainable tourism. the rest of a dwindling season. The number of Kiwis on holiday is slowly The onus falls on us all to not only reducing and will fall significantly after work to revive the industry, but to Waitangi weekend. bring it back better as a world-class and With border restrictions in place, genuinely sustainable tourism industry to enrich New Zealand and New that missing international visitor spend will be another $1.5 billion per month Zealanders’ lives. for February and March. In all, a $6 An industry that delivers what billion hole in summer. communities want, that is best for our 34 FEBRUARY 2021 - HOSPITALITY BUSINESS
Chris Roberts, CEO Tourism Industry Aotearoa
land and our people, and will be the best it can be for future generations. TIA is pushing the initiatives contained in our Election 2020 Tourism Action Plan, which sets out how the Government can work with the industry to revive and revitalise tourism in Aotearoa. We were pleased to have the new Tourism Minister Stuart Nash speak to the 300 delegates at Tourism Summit Aotearoa shortly after the November election. We look forward to working with the Minister and other Ministers to tackle the key priorities. Tourism recovery through 2021 will be a challenging process, no doubt with more surprises to come. To be successful, the rebuild must consider inclusion, economic value, community values, cultural connection and climate change perspectives. Hopefully you’ve all been remembering to look after yourselves and were able to catch a break of your own this summer—whether that meant travelling to a different region or spending time with loved ones at home. Whatever the year has in store for us all, I’m looking forward to supporting the tourism and hospitality sectors through this uniquely challenging time. ■