OPINION: Once again in this never-ending pandemic, the hospitality industry has borne the brunt of measures to protect New Zealand’s public health.
As the Government extended Auckland’s lockdown by another week on Monday, the glimmer of hope hospitality businesses had been waiting for failed to materialise. It may be some time before they see real light at the end of the tunnel.
Alongside the tourism sector, hospitality has been disproportionately affected by lockdown measures. But unlike tourism operators, they are yet to receive any dedicated support. After several lockdowns over the past 18 months, it feels as though the sector has reached a long-predicted breaking point.
According to analysis from ANZ, the hospitality industry is 60 per cent down on normal levels of activity, despite most of the country operating under alert level 2. While that’s an improvement on the last nationwide lockdown in 2020, it’s a dire situation for any industry to contend with in successive years.
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Even in a best-case scenario, Auckland’s hospitality sector looks set to face a week in level 3 restrictions after Monday, followed by a spell in level 2, where indoor capacity in bars, cafés and restaurants has been limited to 50 people.
Tightened level 2 rules (which previously allowed 100 people inside) have hit larger hospitality venues hard, with well-known Wellington café Prefab closing its doors. Similar casualties in Auckland are expected to follow.
Like last year, the Government has opted against providing tailored support to hospitality companies. Executives in the industry met with finance minister Grant Robertson last week but received no indication that the cavalry was on the way.
Though the industry has claimed the wage subsidy and the additional resurgence support payment (which offers $1500 per business and $400 per employee), business leaders say further urgent assistance is needed, particularly for larger premises.
While wage subsidies have proven effective in keeping employees in jobs, hospitality businesses say they need additional cash to cover their fixed costs and replace lost stock.
Kirk Hope, chief executive of BusinessNZ, welcomes the recent extension of the resurgence support payment but believes the Government needs to do more.
“There are cases where the RSP is not providing sufficient support,” he says.
“We support Hospitality NZ‘s view that other forms of support could usefully include venue support, based on size, to provide scalable support, and grants to help pay fixed costs such as rent, rates, insurance, and electricity.”
Other nations (albeit countries dealing with longer lockdowns), have offered targeted support packages to the hospitality industry. The UK government provided “restart grants” of up to £18,000 (NZ$35,000) for retail, hospitality and leisure premises earlier this year.
Trading conditions are likely to remain challenging for hospitality for the rest of this crisis as Delta rewrites the playbook. Even if this lockdown is successful, it seems unlikely that we will go back to pre-Delta settings. Restrictions on bars, clubs, restaurants are likely to remain in some form due to the increased threat posed by the highly transmissible variant.
And if the Government follows its roadmap to reopening next year, Delta will become a prominent threat in the community. This suggests hospitality businesses will need to make permanent adjustments to operate safely. The days of total freedom under level 1 look numbered.
Though a financial support package for the sector looks unlikely at this stage, local and national government could explore some creative options to help hospitality companies. Businesses have been adaptable in this crisis, and our leaders should be too.
Councils will need to be more flexible on outdoor dining and drinking, and should allow businesses to expand their capacity across pavements and closed roads where possible.
Wellington Council has indicated it is willing to consider new outdoor spaces for food service, while Auckland councillor Richard Hills has voiced his support for new measures in the city. The Restaurant Association says it is “actively working with regional business associations and councils to see what can be done”.
Some of the world’s great cities have adapted to outdoor service during this crisis. New York’s “open restaurants” and “open streets” programmes allowed eateries to extend to pavements and roads. In England, pavement dining, outdoor alcohol licenses and “takeaway pint” licenses were extended after resounding success.
New Zealand can take blueprints from overseas to help hospitality operators recover from lockdown and adjust to post-Delta life. The summer months present an opportunity for cities to experiment with outdoor hospitality and replace car parks with dining tables.
The odds are stacked heavily against hospitality, and the sector will face more pain as the pandemic drags on. But the industry doesn’t have to be a sacrificial lamb in the fight against Covid. Financial support and a fresh approach to outdoor options can help.
Policymakers need to get creative in the year ahead. Livelihoods depend on it.