22 February 2022
Hon Grant Robertson
Minister of Finance
Kei te rangatira, tēnā koe
Threshold challenges for hospitality businesses looking to access latest support
Following on from my letter of 4 February, I welcome yesterday’s announcement regarding the new financial support offering for businesses affected by Omicron. In particular, I was pleased to hear the Government acknowledge that sectors such as hospitality are continuing to experience a significant drop-off in business despite the majority of the economy operating close to normal in the traffic light system.
While all support is welcome, it is important to relay the concerns we have and those we have received from concerned members overnight as businesses begin to review their eligibility. The current threshold – requiring firms to show a 40% drop in seven consecutive days within the six weeks prior to the shift to Phase 2, compared to seven days after the shift – is problematic for many hospitality operators, as it does not take into account seasonal trading changes, nor the fact that concerns about Omicron have been in play since the end of last year. Omicron was already creating significant disruption for the industry well before the shift to Phase 2.
January is traditionally a quiet time of trading for our sector, particularly for businesses based in our larger cities and city centres. This was more pronounced in summer 2021/2022, as many Kiwis changed their holiday habits following the gruelling end of year lockdown. Member data shows that hospitality businesses were down, on average, 30% in January 2022 compared to the previous year.
Many hospitality businesses this support was designed to capture,will miss out because of the way in which the threshold has been cast:
- For example: many hospitality businesses are unable to show a 40% drop when comparing a week of February trading with January summer trading, yet a comparison with a comparable period last year may show a 50% drop.
I am writing to request the Government review the threshold for this latest support, and extend the comparison period by a further four week, to the beginning of December 2021, or preferably of a comparable period.
Ever since August of 2021, revenues have been down on previous years so the ability to be able to compare to a period when we were not impacted by alert level operational restrictions, would be a more reliable reflection of the impact to business. Or for new businesses, the ability to compare to the December 2021 period.
If you have any questions or require more clarification about this recommended change, I would welcome the chance to discuss this with you in more detail. Access to the right support at the right time remains crucial for our sector’s survival.
I also appreciate our sector continues to be an outlier to every rule and every framework enacted to ensure support offerings are not taken advantage of by those without real need: however it is important we work together to get this right. The actions the sector and Government take together in the coming few months will directly impact how New Zealand’s hospitality scene rebounds following the Omicron outbreak.
Thank you for your consideration on this urgent matter. I look forward to hearing from you.
Ngā mihi nui,
Marisa Bidois
Tāhūhū Rangapū (Chief Executive)
Restaurant Association of New Zealand