Cost of cancelled Auckland events runs to millions for affected businesses

Tuesday, 16 February 2021

Cordis hotel general manager Franz Mascarenhas says the impact of Auckland’s three-day lockdown could be felt for months to come, and he hopes the Government will do more to assist the tourism sector.

The cost of calling off conferences and events during Auckland’s snap lockdown will run to millions of dollars, and businesses say Government aid will be a drop in the bucket.

Uncertainty over how long the Alert Level 3 restrictions will apply are also causing major headaches for upcoming events, such as Auckland’s Home Show, which was due to start a five-day run next week after being delayed by the last Auckland lockdown.

Cordis hotel general manager Franz Mascarenhas said the return to Alert Level 3 had cost close to $500,000 from cancellations of three events and 425 guest bookings.

“We had a large residential conference that was taking 300-plus rooms for two nights. Our occupancy was going to be around 80 per cent and is now down to 8 per cent.”

The EMEX trade show at the Auckland Show Grounds was postponed for a second time owing to the return to Alert Level 3 and organizer Brent Spillane said it would be pushed out to 2022 because the current uncertainty was just too much for exhibitors.

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Total CNC is among close to 200 exhibitors caught out by Auckland's abrupt return to Alert Level 3. It has worth of equipment marooned at the Auckland Show Grounds events centre.

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The EMEX high tech machinery show was called off on Monday and XPO Exhibitions managing director Brent Spillane estimates he has lost at least $500,000 from rescheduling that event and the BuildNZ trade show.

“This is the seventeenth show rescheduled or cancelled over a 12-month period and those are extraordinary costs for us.”

The business events industry employs about 27,000 people and is warning of a “catastrophic” trickle-down effect on hotels, venues, audio visual suppliers and catering companies as the latest lockdown causes events to be called off.

He said the two events historically attracted buyers with purchasing power worth more than $900m and generated 5600 visitor nights for Auckland.

“The bigger picture is the tens of millions in GDP that is lost in trade from the show not running.”

Total CNC sells computer controlled machinery and managing director Roger Oxford said he had easily spent $60,000 preparing for the show, as well as investing more than $500,000 on importing gear for the event.

“It’s a bitter pill that’s for sure.”

Oxford is waiting to hear when he will be allowed into the Auckland Show Grounds to retrieve four large machines weighing 22 tonnes and said dismantling his stand would take a full day.

Auckland’s Cordis hotel relies heavily on corporate and Government work during the week, and before the current snap lockdown it used to serve 400 people a day in its main restaurant.

“At the moment everyone is a bit concerned about what time frame we have to get the stuff out, and we can't sell it in the meantime.”

Ram3D manufactures metal parts, such as customised handlebar extensions for the New Zealand Olympics cycling team, and owner Barry Robinson is worried about missing out on vital face to face contact with buyers because previous shows had produced $400,000 worth of sales.

“The other option is for me to put [product] in my case and go knocking on doors, but you can’t do that in the current environment, and it's a slow painful and expensive way to find customers, that’s why trade shows are so valuable to us.”

Organisers of the Auckland Home Show are nervously watching developments because it will run into problems setting up if stranded EMEX exhibits, some of which require cranes to move them, cannot be shifted out of Auckland Show Grounds by Thursday night.

Exhibitions and Events New Zealand general manager Amanda Magnus said the home show was expecting up to 40,000 visitors over five days, and it had previously generated more than $30m of business.

“We’re just holding our breath … It’s a horrible situation.”

Magnus said they would need to be at level 1 for the show to proceed and 400 exhibitors were shipping products from all over the country and Australia.

“For many companies it creates six to 12 months’ worth of work.”

The manager of an Australian bed company was currently in quarantine. “A couple of other Australian companies pulled out, but this one was jolly determined.”

Under Covid resurgence business support announced by the Government, firms that experience a 30 percent drop in revenue over a 7-day period will be eligible for a payment of $1500, plus $400 per employee up to a total of 50 full time staff ($21,500).

Business Events Industry Aotearoa chief executive Lisa Hopkins said application of the wage subsidy just announced was “grossly unfair” to the sector because businesses had to prove they suffered a 40 per cent revenue decline relative to the same period six weeks before the alert level change.

Hopkins pointed out that conferences, corporate events, meetings, business expos and incentives were typically held in the shoulder and winter seasons, not over summer.

The Government needed to understand the particular needs of the industry which had seen millions of dollars worth of business cancelled because the change in alert levels rocked people’s confidence.

Mascarenhas said the support scheme did not take into account the lingering impact a short sharp shut down could have on hotels like his.

“It’s assuming it’s three days then, bang everything is back to normal on the fourth day, but that’s not the way it works out. A three-day closure of this nature could trip the whole month into loss.”

The Cordis had four events planned for the rest of February, one had already cancelled and others were awaiting further developments. “There is approximately $335,000 of business at stake.”

Mascarenhas said the current situation was yet another reason for Auckland Council to continue suspension of a targeted rate on commercial accommodation which had added hundreds of thousands of dollars to hotel rates bills.