Covid-19: Losing $30,000 a month rather than $60,000 the hospitality hope under Alert Level 2

Wednesday, 8 September 2021

Reg Hennessy, owner of Hennessy’s Irish Bar and Hospitality Association Bay of Plenty branch president, said opening under Level 2 was not about making money, just trying to lose less.

Reducing losses, rather than making profit, appears to be the main driver for hospitality businesses opening their doors in the tourism Mecca of Rotorua as New Zealand enters Alert Level 2.

With the lockdown restrictions easing as the country, outside of Auckland, moves down alert levels restaurants, pubs and bars are now able to reopen, albeit with stricter conditions including greater requirements around masks, and stricter limits on indoor and outdoor gatherings.

The maximum number of people allowed at indoor hospitality and event venues is now 50.

Reg Hennessy, owner of Hennessy’s Irish Bar and the Hospitality New Zealand Bay of Plenty branch president, was blunt about his expectations under Level 2.

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“We’ll lose money,” he said.

Hennessy said hospitality businesses were still stuck with costs such as rent, power, wages, staff KiwiSaver and “a million other costs”.

Rotorua's normally busy Eat St dining precinct was almost empty on Wednesday afternoon.

“These businesses cost a huge amount of money to open, us it’s $60,000 a month,” he said.

The aim of opening his doors he said was “losing $30,000 rather than $60,000 a month.”

He said the wage subsidy, while good for staff, stopped at Alert Level 2 and said businesses were “screaming out for some sort of support”.

He also said the fact Auckland visitors remained out of bounds for now was a blow.

“If we’ve got to rely on Rotorua, people will struggle. Rotorua has always relied on tourists and out-of-towners.”

Croucher Brewing co-owner Paul Croucher said losing the Auckland market was a blow to Rotorua’s hospitality businesses.

He said when they emerged from the last lockdown, a “sugar rush” of Auckland visitors arrived, something he is not expecting this time.

Hennessy said another fear was stalking the sector too, that of Auckland’s lockdown extending into the Christmas period.

“Death by a thousand cuts. What’s the word when you’re going to die? Terminal.”

Gregg Brown, who owns Rotorua’s Pig & Whistle pub and Capers restaurant, also said he expected to lose money.

“But we’ve got no choice [to open]. I haven’t seen any mention of the wage subsidy at Level 2. Without a wage subsidy we have to open, to try at least.”

He said the sole aim was to “reduce the loss” and also cited Auckland’s situation, the loss of conferences and sports events as a further blow to the sector.

He also said irrespective of lockdown conditions, it was confidence that the sector needed to see return, especially when it came to visitors from the City of Sails, citing moves by the likes of Airbnb to decline refunds for lockdown-related cancellations.

“It’s not a great trading environment, but we box on.”

Brew Bar and Croucher Brewing co-owner Paul Croucher said he wasn’t sure opening would be worthwhile either, though he said it was good for staff morale.

It didn’t come without its problems though.

“It’s a real juggling act to make people feel valued and keep them safe,” he said.

“Having the face masks at least mitigates the risk.”

He also expected the loss of both the conference and Auckland markets to hurt Rotorua, and made a promise.

“I’ll never call anyone a Jafa again.”

Rotorua Mayor Steve Chadwick said Auckland was Rotorua’s biggest domestic market, accounting for around 30 per cent of spending across accommodation, recreation, food, beverages and retail.

“So the longer we miss out on this market the greater the impact on businesses reliant on tourism.”

She said events such as conferences had also been helping businesses through the winter months, and that council’s venues staff were working to reschedule as many as possible, rather than see them cancelled.

“There is also a bit of concern around what the upcoming school holidays may look like for us this year if we still don’t have the Auckland market by then, it is usually a busy time for us,” she said.

“We are still in very uncertain times which means there is ongoing anxiety so it’s a very tough environment for our businesses right now, particularly knowing how different and more dangerous the Delta variant is. Business people are nervous and that’s understandable.

“It's really important that everyone continues to play their part in following the rules and guidelines so that we can move back to Level 1, and with it some sort of normality, as soon as possible.”