Tourism Export Council 'immensely disappointed' by $311m industry aid package

Friday, 31 July 2020

Tourism’s $400 million rescue package has copped some flak from smaller businesses.

The Tourism Export Council has blasted a $311 million aid package for the tourism industry, saying a key sector of the industry isn’t getting the help it needs.

The package – which is part of a $400m scheme originally outlined in the May Budget – includes $230m of grants and loans for 126 businesses which the Government said could save about 3000 jobs.

But Tourism Export Council chief executive Lynda Keene said it was “hugely frustrated” that no inbound tourism operators had been successful in their grant applications and would instead be supported by a separate $20m loan scheme.

Keene said the loans would not help its members as “they have no income coming in for 18 months”.

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Inbound tourism operators are businesses based in New Zealand that typically employ five to 50 staff helping foreign agents arrange tours and itineraries for overseas tourists visiting New Zealand.

They have seen their income disappear as a result of border closures but Keene said they would be a “vital element to recovery when borders re-open”.

At the moment they were still “extremely busy” rescheduling trips that had been planned before the Covid crisis, often for a second time to late next year, she said.

Keene said she was not sure why they had grants refused, or if they were being cut loose by the Government because of the uncertainties they faced about reopening.

But she said it would be wrong to assume that inbound tourism operators could be allowed to fail or go moribund in the expectation they could easily get off the ground again once borders reopened.

“Inbound tourism operators have highly qualified and experienced staff. A lot of that is because of the reservations system they operate and their language skills.

“Most of the operators have been there for years and the real ’IP’ is the relationships they have offshore with wholesale tour agents,” she said.

They had already cut their staffing by about 80 per cent to “the bare bones” and unskilled workers could not come in and be effective, she said.

Encounter Kaikoura general manager Lynette Burman says the $900,000 it has been offered in Government support will help keep the business afloat for two years “We’re just so grateful.”

“It doesn’t make sense to cut off strategic assets that can reignite New Zealand’s economy with $9.5b as soon as the border opens.”

Keene said the funding decision was “completely unexpected”.

Inbound tourism operators were led to believe they would be eligible to receive grants, she said.

“We are confused why this decision to offer loans instead of grants has been made.”

Like many Māori tourism businesses, Rotorua’s Mitai Māori Village is having to adapt to doing without the overseas visitors who made up the majority of its customers.

Keene said in a letter to members that “words cannot express the immense disappointment” she and the council’s board felt on their behalf.

The council felt it was in a good position to offer support and guidance to officials and the Government, but felt it had hit “a brick wall”, she said.

The council’s disappointment has been matched by relief in some other parts of the industry.

Tourism Minister Kelvin Davis said the aim of the $311m package was to help the recipients weather the uncertainties of Covid-19 and become more sustainable.

Just over 300 businesses had applied for the $230m central package of grants and loans, he said.

Dunedin’s Monarch Wildlife Cruises and Tours is among the wildlife attractions to receive funding. Others were the Otorohanga Kiwi House, the Oamaru Penguin Colony and the National Kiwi Hatchery.

“The package will support tourism operators of all sizes and types including cultural attractions, adventure activities, scenic tours, zoos, aquariums and wildlife encounters,” he said.

Another $50m has been allocated for regional events to encourage domestic travel and $10m to help tourism businesses improve their digital capability.

Kaikoura Dolphin Encounter general manager Lynette Burman burst into tears when she learned her business would receive $900,000 in Government assistance.

“I cried when I got the email, it was pretty emotional because you are so worried about so many things.

“There was so much was riding on this, and suddenly we have a future,” she said.

Burman said it had been offered a $450,000 grant and a loan of the same amount if required.

“It will sustain us over the harshest times and get things cranking again.”

The Dark Sky Project in Tekapo has received assistance from the strategic tourism assets programme.

Rotorua’s Mitai Māori Village is also celebrating after netting a $500,000 grant and the option of taking up a $2m loan.

It was among 18 Māori tourism operators to receive assistance including Ko Tāne in Christchurch, Whakarewarewa Living Māori Village, and several of Ngāi Tahu Tourism’s South Island businesses.

Founder Wetini Mitai said the grant would help it retain its 80 staff and look at ways of using new technology, such as holograms, as it redesigned its experience to attract domestic visitors.

“I don't know how we’d do that without funding, technology is expensive.”

Previous grants have attracted criticism, particularly the decision to provide a $5.1m grant to AJ Hackett Bungy New Zealand, and a loan of a similar amount.

Publicly listed Tourism Holdings received $4m for its Waitomo Caves operation, and Kaikoura Whale Watch $1.5m.

However, the latest funding round has capped all grants at $500,000 and applications were topped up with low-interest loans.

When asked why, Davis said things had changed considerably in recent weeks, especially in relation to the likelihood of a trans-Tasman bubble, and they wanted to help as many businesses as possible.

“This about keeping the business open and keeping staff employed until things pick up.”

The $400m budget rescue package for tourism has now been fully allocated and Davis made it clear further wage subsidies for the sector were off the table.

“We couldn’t keep tourism businesses operating at pre-Covid levels until the borders reopened, that’s just unsustainable and also unfair on other industries that are also doing it tough.”

Economist Benje Patterson said although the asset protection programme had honourable intentions, it was fraught from the start.

To be eligible, businesses had to be considered crucial for attracting overseas visitors.

But Patterson said the pandemic could well lead to significant changes in the type of tourists coming here, and what they wanted to do, and the eligibility criteria should have considered that.

“With flights expected to cost more, we may have less mass volume, youth tourism coming to the country, and in its place, a more discerning type of traveller.

“Even if an asset is deemed critical, that still doesn’t mean it should be funded.”

Patterson said there was also no point in the Government giving money to a business that had little unique intellectual property, and could easily be restarted by someone else down the track if it failed or opted to close.