Following the announcement of Delta Level 2 restrictions outside of Auckland, Business Association heads for Newmarket and Parnell are calling for the government to acknowledge its impact on the hospitality sector and provide more robust, urgent support for businesses. With the hospitality industry already under siege, they say the new rules, if implemented in the same way for Auckland, will create further dire consequences on both on-site service and takeaway performance, rent and crime.
Cheryl Adamson, Parnell Business Association GM, says while last year saw business owners put on a brave face and struggle through Level changes, the new Delta Level 2 restrictions are totally unworkable for the hospitality sector.
“2020 was tough enough, notwithstanding acute staff shortages that have grown over the past year. Many said Level 3 was too hard for their eateries, and aside from the seasoned take-away providers such as Indian or Thai restaurants who might survive, we predict far fewer outlets will even try to keep going this time around.
“If the rules announced for the rest of the country are what the Auckland hospitality sector has to look forward to in coming weeks, we’re going to see many more outlets shut up shop and become forced out of business.”
Mark Knoff-Thomas, Newmarket Business Association CEO, says the restrictions should be reviewed and redeveloped to better reflect the diverse range of hospitality businesses in New Zealand.
“Newmarket’s hospitality sector is worth over $110 million annually. Some of our restaurants are huge and can seat hundreds – yet under these new rules, they’re restricted to 50. Surely a ratio based on square metres of dining space would be more appropriate, and sensible?”
Knoff-Thomas also notes the industry is not experiencing the same extent of support from landlords as in previous lockdowns, saying “We understand many landlords have been affected, and that they’re not all in a strong enough financial position to carry their tenants. This is where we really need government assistance for both parties.”
Mike Jennings, Director of Front Row Hospitality, has encountered varying levels of support from landowners, and suggests that many SME owners will be losing sleep over what to do about rent, come 1 October.
“The biggest issue we’re facing right now is that on the first day of each month, rent is due. But if our businesses can’t trade before the end of the month, we have no cash reserves to keep going. And the responses we’ve received from landlords range from providing zero support, to short and long deferrals, to even potential abatement. It’s not consistent across the board like last year.
“It used to be a bit of a joke that Level 3 was like Level 4. Now the joke is that any Level above 1 is like Level 4. While they impose more restrictions, the government needs to look at targeted assistance for hospitality or else the beginning of October will arrive and many will start to default on leases,” concludes Jennings.
With evidence demonstrating how economic fallout increases criminal activity, there are worries regarding what effect the 2021 lockdown will have on crime rates, which have spiked significantly since the introduction of the pandemic.
Following an open letter last month to the Prime Minister from central Auckland business associations including Heart of the City, Karangahape Road, Uptown and Ponsonby, the heads of Newmarket and Parnell are yet again asking for assurances that the government is actively working on reducing crime.
To respond to the impact of this lockdown and new Delta Level 2 rules, Newmarket and Parnell Business Associations request the Government activate the following additional support, as soon as possible:
· A Rent Support Package, including assistance for both landlords and tenants
· Increase in Resurgence Support Payment levels
· Commitment and activity to reduce crime
Knoff-Thomas adds, “Businesses need much more support. Fixed costs don’t stop. And the naysayers who talk of “corporate welfare” need to remember that the vast majority of the government’s income, 73% in fact, comes from tax. Tax generated by businesses – by means of GST, income and provisional tax.”
He also suggests Auckland Council and corporate organisations will have a role to play post-Level 3, commenting, “Auckland Council needs to be readying itself to announce a relaxation in outdoor trading rules so that cafes, bars and restaurants can fully maximise their outdoor spaces. It’s also time for large corporate businesses to think about how they’re going to get their staff back in the office. Corporate workers provide a lifeline to the hospitality sector.”
Adamson concludes, “The hospitality industry has repeatedly taken the brunt of the COVID-19 response. After a prolonged Level 4 which discriminated against Auckland business, and a Level 3 with no understanding of when and how long – if Auckland’s Level 2 then follows the precedent set yesterday, we need to ask if the government actually wants to preserve the heart and soul of Auckland hospitality. Without these sorts of practical interventions, dozens of businesses, potentially hundreds, will end up flatlining.”