Horwath HTL Sentiment Survey: New Zealand Hotel Industry and the impact of COVID-19
Business confidence among New Zealand's hard-hit hotel sector is much bleaker than business confidence in general, according to a new survey.
The New Zealand Hotel Market Sentiment Survey was undertaken by Horwath HTL and Tourism Industry Aotearoa to examine how the COVID-19 pandemic is affecting hoteliers' outlook for the New Zealand hotel market in general and their hotel in particular. 115 hoteliers responded to the survey which was carried out between 30 April and 5 May 2020.
40% of respondent hotels are already fully closed and with little prospect of New Zealand's borders opening to international visitors any time soon, the outlook for the next two years is bleak. 73% of respondents expect that trading conditions for their hotel in 24 months' time will have deteriorated compared to 2019.
Business Confidence Score
These results equal a business confidence score for the two year period of -64% (percentage expecting improvement minus percentage expecting deterioration).
"This is worse than results reported by the latest ANZ bank business confidence survey, where for the next 12 months, a net 55% of firms expected weaker activity for their own business," Horwath HTL Director Wim Ruepert says.
"These results come at a time when hotels reported an average occupancy of 14.9% in April. The survey found that 68% of hotels in regional areas are fully closed. In Auckland, where some hotels are being used for quarantine purposes, 20% of hotels are closed. Only 11% of Queenstown hotels are fully operational with 58% fully closed."
The impact of the pandemic on hotel employees is extremely high with most hotels expecting heavy redundancies when the Government's wage subsidy scheme ends in June.
"Overall, hoteliers expect to reduce the number of employees by an average of 56%. Job losses in the main visitor destinations are expected to be higher, from 69% for Queenstown hotels to 89% for hotels on the West Coast," TIA Hotel Sector Manager Sally Attfield says.
"Hoteliers have no choice but to let their people go, as they are not expecting to continue receiving Government wage subsidies for the next two or three years until the demand for hotels has recovered."
66% of hotels expect to make a cash-loss in 2020 (negative operating cash flow) and are calling for ongoing financial assistance from the Government, including a significant budget increase to provide Tourism New Zealand with the required resources to help fill their hotels.
About Horwath HTL
Horwath HTL is focused one hundred percent on hospitality, tourism, and leisure consulting. Our services cover every aspect of hotel real estate investment, tourism, and leisure development. Our clients choose Horwath HTL because we have earned a reputation for impartial advice that will often mean the difference between failure and success. Each client project is unique, and they rely on us to utilize the experience we have gained throughout our 100-year history to assist them in achieving their goals. Being a global firm with 52 offices in 40 countries, we have successfully carried out over 40,000 assignments for both public and private clients. As part of the Crowe Global network, a top-ten accounting, and financial services network, Horwath HTL is the number one choice for companies and financial institutions looking to invest and develop in the industry.
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