News In BriefTourism

Will a prolonged level 3 lockdown make matters worse for accom businesses?

Hospitality industry-makers fear move to level 3 will not save thousands of businesses from going under, demands gov action.

The “go hard go early” approach to COVID-19 has prevented a healthcare nightmare and many deaths but sadly it may also be the nail in the coffin for thousands of small businesses.

Under level 3, cafes, bars and restaurants will remain closed to the public but can offer contactless delivery services. Hospitality New Zealand Chief executive Julie White told RNZ Radio that this loosening of lockdown will make a small difference to the day to day income of some businesses but may not be enough to save thousands facing closure.

Under level 3 Level hospitality businesses can offer contactless delivery and this is certainly a slight reprieve for some, but it is not a feasible solution for many others teetering on the edge. Tourism and hospitality related businesses have experienced revenue loss longer than most other industries, many have seen a dip since January, add seven weeks with no income at all and 40 percent of hospitality businesses may close, Julie white predicts.

Hospitality NZ is calling for the government to provide more financial support to sustain hospitality businesses. According to Julie talking on RNZ radio, a code of conduct for rent relief is urgently needed with only about 50 percent of landlords coming to the table to negotiate leases and an extended wage subsidy must be in place to maintain jobs.

Several other business and industry groups have also joined forces to show a united front when it comes to the issue of commercial leases and are calling on urgent action from the Government to increase protection for commercial tenants in the face of rents that are now completely unaffordable under the COVID-19 lockdown and now pose a serious threat of causing business failures and job losses.

Speaking on behalf of the group of eight, Greg Harford of Retail NZ said the risk of eviction is now a part of everyday life for thousands of New Zealand small business employers.

“Nearly four weeks into Level 4, and with at least three more weeks of trading restrictions ahead, many thousands of small businesses are now at risk of closure and job losses unless the Government acts urgently to require commercial landlords to come to the party.

“We applaud the government for its response to COVID-19 which gives New Zealand the best possible chance of recovery. The Wage Subsidy is a genuine lifeline which will preserve businesses and protect jobs while other significant measures are keeping the lights on in the economy.

“But without action on rent and leasing costs, all of this could be brought to nothing: many businesses are facing possible eviction and costs. If nothing is done, the effect will be to drive businesses from their operating locations, impacting jobs and communities for many years to come.

“Short term action on commercial tenancies is the missing piece of the COVID-19 response jigsaw and could be the difference between an economy that is ready to go again and one that will be scrambling to make ends meet. Proportional relief from rent and outgoings is essential to saving many businesses. The Government has already moved to support commercial landlords by reinstating depreciation, and we would also encourage Ministers to look at other ways of supporting them if required,” said Greg Harford.

Concerns have also been raised from motel associations about the empty motels around the country that are on the brink of collapse. Without any form of real income these small businesses still face ongoing costs like rates, electricity and for most motel owners it is the rent to their landlord that is the biggest outgoing. These landlords also need to come to the table and negotiate.

 

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