Hermitage Hotel rejects Government help because bookings are so good

Friday, 18 September 2020

Since opening in July, bookings at The Hermitage have been heavier than expected and many staff laid off have been rehired.

Just months ago The Hermitage Hotel was about to cut 170 staff, but bookings are now so good it has turned down an offer of Government help.

The hotel, along with a nearby lodge and motels, trades as Aoraki Mt Cook Alpine Village and director Peter Carnahan said the company had decided not to accept a grant and loan package from the strategic tourism assets protection programme (Stapp).

He would not disclose how much money had been on the table, but many of the 130 businesses chosen for Stapp funding were offered the maximum grant of $500,000 spread over two years.

Carnahan said they had opened about 130 rooms which were pretty much full every weekend, and staff numbers were back up to about 70. “We couldn’t ask for more than that.”

New Zealand had about 20,000 tourism businesses pre-Covid and about 126 key ones received more than $270m in grants and loans to save them from possible closure.

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Larnach Castle was built in 1871 and pre-Covid it attracted 135,000 visitors a year, 65 per cent of them from overseas.

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The Marlborough Tour Company was disappointed to be declined for strategic assets funding to carry out much-needed repairs on Howden House at Furneaux Lodge on the Queen Charlotte Track.

Things changed between the time Stapp applications closed in June and the more recent funding offer. “We decided the level of business was such that we were happy to trade on our own.”

Aoraki Mt Cook Alpine Village and NZ Ski, the only other business to decline Stapp money, are both owned by Trojan Holdings, a major shareholder in AJ Hackett Bungy New Zealand, which received $10.2m in Stapp funding.

The AJ Hackett decision attracted considerable criticism because the company’s wealthy owners include rich lister Sir John Davies and founder Henry Van Asch, but Carnahan said the decision to decline the financial assistance was in no way related to the Hackett controversy.

The Stapp scheme specifically excluded accommodation, transport and retail businesses from applying unless there were compelling cultural or heritage reasons to include them, and new capital projects or upgrades were not eligible.

According to Tourism Minister Kelvin Davis, the Duke of Marlborough Hotel in the Bay of Islands, New Zealand’s first licensed pub, and Dunedin’s Larnach Castle which provides some accommodation, were also offered funding because of their iconic status.

Larnach Castle managing director Norcombe Barker said they were extremely grateful for the $500,000 grant and it would help pay for insurance, rates, and much needed restoration work due to start in a few weeks.

He said they would only take up the $1.1m loan offer as a last resort. “Our problem is that we’re not making cash, and we’d have to pay the loan back.”

Chief executive of the Marlborough Tour Company Abbe Hutchins was surprised to learn that money from the fund could be used for restoration work.

She had applied for $8.6m to do urgent work on Howden House, a heritage building housing a bar, restaurant and staff accommodation at Furneaux Lodge which caters for visitors walking Queen Charlotte Track in the Marlborough Sounds.

Hutchins said the MBIE told her the project was outside the scope of the Stapp because it was classed as new capital work, and she has now written to Davis asking to have that decision reviewed.

Davis has already said there will be no reviews of Tourism Ministers Recovery Group decisions awarding funding to 130 businesses.

“We know that people are upset because they missed out, people believe that their business should be the one that is supported, but it just was not possible.”

However, Davis said businesses had to report quarterly as a condition of their grants, and if economic conditions improved, MBIE had the power to terminate funding agreements.

“If [businesses] no longer have use for the funds, i.e that they’re not going to operate, or the flip side, they’re doing better than they thought, well then that's what the facility is for with the quarterly declarations.”