CEO, Marisa Bidois, presented to a group of representatives of Councils from around Aotearoa in a hui organised by Local Government NZ. This hui was an opportunity to provide industry feedback, to discuss the industry’s key challenges and potential solutions to progress in the short to medium term to make a difference across the hospitality, tourism, arts and events sectors.
We’ve highlighted the points Marisa raised in the discussion below.
Our industry challenges
- A recent survey conducted by us to find the top challenges for our sector (Hospitality – specifically restaurants and cafes and business where food is the hero) outlined that Recruitment, Costs, and Building and Maintaining Customers are the industry’s top concerns as we head into our recovery. I’ll briefly touch on these three topics.
Recruitment, Costs, and Customers.
- The biggest challenge currently is finding staff – 79 percent of our members have found it difficult to recruit for junior-level positions and a whopping 94 percent for mid/high-level positions.
- There are so many reasons that staffing shortages are being felt right now, with many of them out of our control – COVID, record-low unemployment rates, reduced access to international workers, record-high inflation and the flow-on impact that has on employment.
- Our members worry about their ability to recruit international workers and with the border reopening announcement on Wednesday bringing forward the opening date to July, now more than ever we urgently need workers to fill the shortages, so that we are ready to welcome our returning international tourists and service our current customers.
- I’m sure you all will have seen in your cities just how many businesses have had to close temporarily as a result of staffing challenges. In April 53% of our members had temporary closures due to ongoing staffing shortages. That’s not the industry we want to be showcasing to international visitors coming here for the first time in years. Our visitors, will be expecting our doors to be open and the world-class hospitality New Zealand is known for.
- What we can influence is the presumption that hospo is a short term job for university students to do while they’re studying.
- We’re doing everything we can to change the narrative around hospitality, and show how our industry can offer a rewarding career and lifestyle. Our #hospolife marketing campaign currently in market does just this – encouraging people to ‘find their future in hospo’.
- We are currently working closely with the Regional Skills Leadership Groups and I am part of the Auckland Group. We are working closely in developing some solutions for these areas, along with our Hospitality Roadmap – on the recovery of the sector.
- No matter how hard we work to change that narrative, we will need help to both backfill the immediate staffing needs of hospitality and achieve the long term change in the narrative through systemic policy change, and I’ll talk more about this and how Councils can help as we go through our discussion today.
- As I mentioned there are really three key challenges and perhaps more relevant to our discussion on Council support are the challenges around Managing costs and Maintaining and building sales.
- Council can play a part in helping to manage costs to business. This week we asked our members what Council support is most important for the sector and feedback is that ‘discounts on Council fees / licensing fees in recognition of weeks of lost/reduced trading would have the biggest impact. Having flexibility around payments of Council fees for those facing hardship is also ranked highly in importance.
- There have been some excellent examples of this happening already and we would welcome more of this. For example:
- Hamilton City Council announced earlier this year that they would provide a temporary 50% reduction to fees for food safety verifications, which is on top of initiatives to provide 50% rent relief to Council tenants in the sector and waiving fees and charges for outdoor dining permits.
- Wellington City Council announced that until February 2023 they are only charging $1 for annual licensing fees (plus the ARLA levy) and also $1 to vary a licence to include an outdoor area (plus the ARLA levy). They have also reduced Food registration fees for renewal, to $1.
- Auckland Council last year automatically extended, without cost, existing outdoor dining licences and waived outdoor dining licence application and rental fees – however these measures have now expired.
- In that feedback around council-led support members also highlighted the positive impact that Dining campaigns to encourage the public to dine out would have – this of course links back to the challenge of Building and Maintaining Sales.
- Regionally-led dining campaigns are widely recognised internationally as key initiatives to help encourage economic benefit for a range of sectors.
- There are many forms activity could take; from culinary festivals and marketing campaigns to drive customers back into dining out, to Council-supported voucher schemes and I can also talk to this when we come to the solutions part of our discussions.
So in summary the key issues for our sector according to our members are Staff Recruitment and Retention Challenges, Managing Increasing Costs, and Building and Maintaining Sales.
Thank you for the opportunity to present this information and I look forward to further discusson around solutions for the sector.
Potential Solutions Discussion
What can metropolitan councils do to support these sectors through the ongoing effects of COVID-19, and how can we act on this?
- I’ve highlighted some of the support that Hamilton City Council, Wellington City Council and Auckland Council have put in place. These initiatives received great feedback from our members, in recognising the support provided by Councils.
- Feedback from RA members gathered this week is that discounts on Council fees / licensing fees in recognition of weeks of lost/reduced trading is the top Council-led support measure that would have the most impact for the sector. Having flexibility around payments of Council fees for those facing hardship is also ranked highly in importance.
- Fees that could be waived or deferred include annual licencing fees, food registration fees and verification visit fees, outdoor dining licence, and any variation fees. Commercial rate increases also have a flow on effect on rent increases for operators.
- This is a very tangible thing that helps provide some relief and breathing room for those hospitality businesses who have their backs against the wall.
Encouraging Staff to Return to Offices
- Our business owners located in central city districts rank the return to working from the office as having the biggest impact for their business.
- Encourage the return to offices to bring people back to city centres and return our cities to the vibrant hubs they once were.
- Acknowledging that research shows that hybrid work is the future, having plans in place can help to calibrate the ‘new normal’ of the ‘office-worker’ economy.
Dining campaign(s) to encourage people to dine out
- Regionally-led dining campaigns are widely recognised internationally as key initiatives to help encourage economic benefit for a range of sectors. RA members rank this as the 2nd most impactful initiative that would provide support for their businesses.
- There are many forms activity could take; from culinary festivals and marketing campaigns to drive customers back into dining out, to Council-supported voucher schemes.
- In Auckland the government-funded Explore Tāmaki Makaurau initiative has been critical in generating revenue for tourism businesses that were hit hard by Covid at the end of last year and this year. It has meant survival for some businesses that otherwise would have struggled to survive. However, the voucher scheme did not include access for consumers to the equally affected hospitality sector.
- Customer hesitancy has played a significant part in the revenue downturn the industry has experienced with Omicron and continues to impact with each outbreak (past and future). Just as Explore Tāmaki Makaurau stimulated economic, social and cultural activities in Tāmaki Makaurau, additional regionally-led activities could have significant impetus for economic recovery, whilst providing targeted ongoing support to the hospitality and tourism sector.
- Short-term incentives such as subsidising or waiving parking fees, or providing the first few hours free in city centres to encourage more people into the city.
- Acknowledge that the debate regarding congestion charging could put this option in flux, but cities such as Sydney do not charge for CBD parking to encourage more visitors to city centres.
- Midweek (Tuesday, Wednesday, Thursday) would be the best days to implement cheaper parking from our perspective as generally slower days for hospitality.
- These small actions all add up to create incentives to get out and support the hospitality and retail sectors.
- Our sector ranks having ‘Immigration policy that balances small business needs, with the long term policy aims of Government’ as the Government-led initiative that would have the biggest impact for business.
- Our sector has been asking for clear guidance from the government on its short, medium and long term plans for immigration and the role it plays in the country’s economic recovery for almost two years now.
- One of the measures that was supposed to provide relief was the relaxing of restrictions for working holiday visas. This was touted by the government as their interim solution to our staffing shortage issues.
- This highlighted to us a lack of understanding for the nature of the issues we’re facing and how they can be addressed.
- The industry is looking for long-term solutions to our staffing challenges and the need to repeatedly recruit, train and onboard those on working holiday visas, given the short-term nature of their employment, adds significant stress for employers who are focused on ensuring the survival of their businesses.
- Only yesterday we were given an idea of the direction we are headed in regard to immigration and the role it plays in staffing for our sector, and there are still issues with the Government’s response that yet again highlight this fundamental lack of understanding – some of which hinges on high skilled (high value in the Government’s view) being solely related to the remuneration level and employee is paid. It’s a one-size fits all approach that simply doesn’t work across every industry and workplace.
- All of this to say, the simplest thing councils can do to support us is to engage with us early on the work you are doing so we can help you to understand how these things will impact us and get proposals right the first time.
What can central government do to support these sectors through the ongoing effects of COVID-19, and how can we advocate for this?
Review of the isolation rules
- The 7 day isolation rules for close contacts is putting pressure on our already stretched industry. In April 48% of RA members had to close their business temporarily over the month due to Covid-related staffing shortages – primarily isolating close contacts.
- Our industry’s workers cannot continue to work from home, unlike other workplaces, and thousands of healthy workers are required to isolate.
- The Association has advocated for ‘Return to work’ rapid antigen testing to be utilised for the hospitality idnstry, as a means for businesses to stay open when there are high levels of isolating staff.
Dine Out to Help Out Scheme
- Something we have been advocating for over the past few years is a subsidised dining scheme funded by central government, to encourage people to eat out.
- After immigration policy, ‘Support specifically aimed at the hospitality sector’ like a targeted dining scheme, is ranked by RA members as the most impactful initiative the Government could lead.
- International examples include that in the UK, and various states in Australia. These were implemented in the midst of the pandemic, so we have the luxury of learning from those schemes and customising our own that focuses on securing our sectors recovery, rather than supporting the sector through the pandemic.
- Having Council support in calling on the Government to implement a scheme like this from the perspective of revitalising town centres and stimulating your local economies would be greatly appreciated.
- We know things have to change, and the pandemic has changed the way we all live.
- The speed at which the Government is making changes in almost all policy areas is astounding, and providing some breathing room for our industries who have only recently been able to begin their recovery from the impacts of COVID-19 would be a huge relief. Recovery doesn’t start with a clean slate, it brings with it 2 ½ years of challenges and debt that still need to be righted.
- We’re juggling the uncertainty of the Income Insurance Scheme, Fair Pay Agreements, Anti-modern slavery proposals and changes to New Zealand’s recycling system.
- We understand the necessity of all of these schemes and changes, but to have the Government forging ahead with these changes while we’re two steps behind is putting a massive amount of stress on our businesses.
- We know these changes are going to be implemented, that’s just where the country is headed. What we’re asking for is a carve out of two years for our industries – which the Government has gone to rather extraordinary lengths to recognise as those that are still feeling the impacts of the pandemic – to allow us to properly recover before we adopt the suite of changes that the Government is working through right now.
- Again, having Council support in asking the Government to recognise the stress we are under right now by providing that breathing room would be really appreciated.
Future Thinking Discussion
Where would we like to be in 6-12 months time? What are the results we’d like to see, and what can we do in the short to medium term to get there?
- Like I mentioned when we began, seeing a change in the narrative around hospitality is one of our goals – and we know it’s possible with government support.
- This was achieved in the construction industry, when the Government realised that New Zealand had a shortage in trade workers, they launched a campaign to change the way trades were viewed to make construction a desirable career path.
- The Government’s Apprentice Boost initiative, and extension of this, are welcomed but this is not the only pathway into a rewarding career in hospitality.
- The move to Orange was really where we knew with some certainty that our sector could start our recovery.
- We need to help build resilience for our sector to help manage future outbreaks and the potential resulting effects.
- It will by no means be an easy time, but what I most want to see is for our recovery to be as quick as possible.
- Creating opportunities to work more closely with councils through challenges and issues facing councils and industries: LAPS, safety, event creation, tourism strategy etc
- Hosted by the LGNZ Metro Sector
- Moderated by Chair, Jim Boult (Metro Sector Chair) – Mayor, Queenstown Lakes District Council
- Metro Sector is made up of:
- Auckland Council
- Christchurch Council
- Dunedin City Council
- Hamilton City Council
- Palmerston North City Council
- Porirua City Council
- Queenstown Lakes District Council
- Upper Hutt City Council
- Wellington City Council
- Whangarei City Council