Hospitality industry shake-up in Southland

Monday, 24 January 2022

Otautau Hotel co-owner Kim Aliu with her young sons Tariq and Khalid. Aliu is putting the lease on the market and is looking for a lifestyle change .

The Southland hospitality industry is undergoing a shake-up with reports of about 20 businesses up for sale.

Many of those looking to exit the industry are longtime Southland hospitality business owners and some reasons relate to staff shortages because of Covid-19, and people wanting a lifestyle change.

Hospitality New Zealand Southland branch president Graham Hawkes said at the present time he could probably name about 20 food and beverage, tourism operators who were on the market to sell.

“I can also confirm that Covid-19 has had a big play in that,” he said.

Staff shortages and the need to add extra employees to check vaccine passes has been a huge issue for the bottom line, Hawkes said.

* Southland businesses: 'We have no clue what's going to happen'

* Alert level changes bring little relief to Southland

Hospitality New Zealand Southland branch president Graham Hawkes at home enjoying his retirement. He sold his business, Paddington Arms, two months ago.

“The other issue though and this is a serious issue for hospitality in Southland at the moment is that there requirements of the Government through their mandates means that you must have somebody on the door, to make sure everyone’s double vaxxed on entry. That takes an extra staff member,” he said.

Also, if table service was required, that would take additional staff, making the costs phenomenal, Hawkes said.

“Which is making a hell of an impact on the bottom line. The reality is that hospitality and tourism operators generally work on a small margin as in somewhere between 10 and 20 per cent.

“But, if you’ve got to add two more staff or three more staff – and seriously on some of these shifts where it’s table service only - you’re going to need to double your staff. So, you can’t get a bottom line.”

While the Covid-19 pandemic is one of the reasons owners were exiting, some are leaving for lifestyle changes.

Hawkes had owned the Paddington Arms since 1992 and sold it two months ago.

“But, that was not through Covid-19, that was simply because the opportunity arose and we’re old,” he said.

Invercargill restaurateur Jerin Nadar has bought two hospitality businesses recently, Eat on Windsor and the rebranded Meraki Food Studio, on top of opening Main Street Café and Restaurant less than a year ago.

Nadar believed while all businesses were feeling the effects of Covid-19, another huge reason for the many changing of hands was because of reaching a saturation point.

“They just want to come out and have a retirement and just relax,” he said.

Otautau Hotel owners Kim and Mutala (David) Aliu have decided to put their lease on the market to spend more time with their young family.

“Basically we just want to take a bit of time out because … we’ve been in the pub the whole time they’ve [sons Tariq and Khalid who are both under 5 years of age] been alive,” she said.

The couple bought the business in 2017, when they moved from Hangzhou, China; their sons were born after that.

“When we started, this was not really going to be a life-sentence,” she said.

Covid-19 had not been ideal for the business, but Kim said due to the hotel being in a little farming community, they were lucky compared to other owners when it came to having regular customers.

Currently, on realestate.com for the Southland region, hospitality businesses such as Lumsden Hotel, Riversdale Hotel, Capri Cafe and Restaurant, Aparima Restaurant and Bar are some listings available.