Covid-19: Tough Choices Loom For Desperate Hosting And Hosting Providers

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Increasingly desperate hospitality and accommodation business owners are considering liquidating, indebted and selling their homes as the snowball effect of the Covid-19 pandemic hits hard.

Hospitality New Zealand warns that the new Tier 2 will offer no reprieve for businesses that lost thousands of dollars a day during the lockdown, and the new restriction of 50 domestic customers “could be the last straw” for many without one. additional financial support from the Government.

“The operators are in dire financial straits,” said managing director Julie White.

FASTER BRADEN / STUFF

Restaurant and bar owner Tony Crosbie explains how the closures have affected his businesses.

Along with the continuing wage subsidy, the resurgence payment – which helps cover fixed costs such as rent – is expected to shift from a one-time payment to a weekly subsidy, she said.

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“Rent, ACC and other fixed costs continue regardless of what level you are at, and adding restrictions will make it even more difficult to meet them. “

As long as Auckland was on lockdown, the rest of the country suffered, as so many domestic travelers came to the region, she said.

Tracy Reeve, left, of Cedar Grove Motor Lodge and Stacie Warren, of Century <a class=Park Motor Lodge. Both companies have struggled to survive due to the Covid-19 pandemic.” style=”width:100%;display:inline-block”/>

Martin De Ruyter / Nelson Mail

Tracy Reeve, left, of Cedar Grove Motor Lodge and Stacie Warren, of Century Park Motor Lodge. Both companies have struggled to survive due to the Covid-19 pandemic.

“Some accommodation providers are zero occupancy, and some are single digit occupancy. They just can’t survive like this.

Finance Minister Grant Robertson said the resurgence payment was not available during the last lockdown and was being watched to see if it needed to be adjusted.

“We will continue to evaluate how it works, as we did last week when we opened it up to businesses that had been operating for a month, rather than the six months when it was first implemented.”

The wage subsidy continued across the country as long as any part of the country was at Level 3 or 4, he said.

Finance Minister Grant Robertson said the wage subsidy had

ROBERT KITCHIN / Tips

Finance Minister Grant Robertson said the wage subsidy had “served New Zealand very well”.

“What we are doing is finding a balance and cost sharing with businesses. The aim is to maintain employees’ attachment to their jobs and to provide a subsidy to help companies on a temporary basis so that they can keep their staff during higher alert levels.

“It served New Zealand very well last year.”

But Ian Williams, owner of The Vic Public House and Burger Culture in Nelson and president of the local branch of Hospitality New Zealand, said it wasn’t just the cost of this foreclosure that businesses were facing.

“In 2020 we had a foreclosure, followed by a winter trade, followed by a bad summer trade, followed by a winter, followed by another foreclosure. With the current prospect of another poor summer and another winter trade. The cumulative effect is enormous.

The latest lockdown and Level 2 would be the “last straw for many,” he said.

“We have accumulated additional private and public debt, deferred payments and bank overdrafts … Many are now faced with the choice of taking out new loans, selling their homes and / or closing the doors of the business. and to abandon the lease and movable property. “

Direct financial aid was the only option left on the table for many businesses on the brink of ruin, he said.

“There is no 5 million team, and the government is happy to see us as the sacrificial lamb of the pandemic, when everyone should bear the pain and the cost equally. It would be a team effort.

Stacie Warren says there will be no stay at Century Park Motor Lodge until Auckland reaches level 2.

Martin De Ruyter / Tips

Stacie Warren says there will be no stay at Century Park Motor Lodge until Auckland reaches level 2.

The owner of the motel

Stacie Warren tries to find a way to raise $ 40,000. This is the amount she needs to meet her monthly bills.

She and her husband own the Century Park Motor Lodge in Nelson.

Their monthly expenses are $ 50,000. During this foreclosure, they received $ 5,272 from the wage subsidy and a resurgence payment of $ 3,500. All the while earning just $ 150 a day since the lockdown.

But level 2 was not a reprieve, she said. Without international tourists, they depended on people coming from Auckland.

“Two-thirds of the population live up there – that’s two-thirds of our business… as long as Auckland is in dire straits, so is the rest of our business. “

For a business where mothers and fathers had high overheads and low personnel costs, the wage subsidy was of little use.

Rents have continued regardless of the favoritism, and landlords haven’t offered the same rent relief as in the last foreclosure because they too felt the financial pressure, she said.

A calm summer had made matters worse, as the summer profits helped push the business through the calm winter months.

Although there was a “sugar rush” from locals after the last lockdown, it was unlikely to happen this year, she said.

Restaurant and bar owner Tony Crosbie owns 14 bars and restaurants across the South Island, including Armadillo's in Richmond.  The confinement cost him around $ 200,000 per week.

Braden Fastier / Nelson Mail

Restaurant and bar owner Tony Crosbie owns 14 bars and restaurants across the South Island, including Armadillo’s in Richmond. The confinement cost him around $ 200,000 per week.

The bar and the restaurateurs

After the disappearance of wage subsidies and resurgence payments, Tony Crosbie still had to find about $ 200,000 a week to keep the lights on during the lockdown.

It has 14 bars and restaurants across the South Island, including Armadillo’s and the Star and Garter in Richmond.

The new Tier 2 rules would make it impossible to make money, and businesses would be lucky if they could even cover the costs, he said.

When you allowed 18 customers to use the slots, you only had 32 in the restaurant.

“From a cost perspective, 35 people in a pub are just having a house party in your living room.

He was hoping Level 2 would be short lived, because if it was to last longer than two or three weeks, he would have to make some tough choices, he said.

He was on the National Board of Hospitality New Zealand and said the message from his colleagues was that they were in trouble.

The hope of Level 2 was simply to get enough cash to keep things going until Level 1, he said.

But he also doubted the “sugar rush” that followed the latest lockdown would ever happen again.

“We will not be able to rely on this. “

Ian Williams, of The Vic Public House and Burger Culture, said those businesses were losing about $ 2,000 a day because of the lockdown.

“We still have overhead costs that are not covered, such as rent, rates, insurance, ACC, and additional loan interest. In addition, we are increasing our staff salaries to 80 percent in addition to the wage subsidy. “

The cumulative effect of Covid, coupled with a staff shortage meant that even at Level 1, the business would still be restricted, he said.

“I have a business that operates half of its trading hours in 2019, and the other closes one day a week.”


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