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Spending figures on accommodation show that while it increased for most of the country last month, Otago and Southland were still down on last year.
The school holidays fell during July and Paymark figures show spending was up on 2019 in Bay of Plenty, Gisborne, Hawke’s Bay, Taranaki, Whanganui, Wairarapa, Marlborough, Nelson, West Coast and South Canterbury.
Only Wellington had a bigger drop than Otago and Southland, and spending on accommodation there was down more than 20% on July 2019.
Otago Motel Association president and Dunedin Palms Motel owner Alex Greenan said while his bookings were down, he had expected worse.
To get by on the reduced income they laid off five staff.
"The market’s not there so that wee bit of cream we used to employ people with, we can’t do it.
"You’ve got to work smarter and harder."
Some of the accommodation providers in Otago were doing well because of the construction work bringing workers to the city who needed short-term accommodation.
"Some guys are doing particularly well. There’s a lot of building stuff going on, so those guys getting the corporates are doing well.
"Some people are doing really well on weekends, because that’s their holiday market and it’s always been their holiday market."
Mr Greenan expected the worst-hit accommodation providers would be the hotels in the region that relied more on the international tourist market.
Sofitel Queenstown Hotel general manager Jeremy Samuels said occupancy last month was down about 15% on last July, but revenue was down about 40%, through a combination of lower room rates, reduced spending on food and beverage, and less uptake of tour and excursion offerings.
Mr Samuels said he was happy with that result because he had originally forecast an 80% fall.
The five-star hotel had not undergone a major restructuring, but had not replaced some staff who had chosen to leave, as its guests expected a high level of service.
He was expecting a steady level of business next month from the Winter Pride festival, business groups and the start of school holidays.
"The real proof in the pudding for me will be after spring holidays finish — we don’t really see any huge demand drivers for Queenstown through until festive season.
"The jury’s still out on what the future of Queenstown will be post-October."
Te Anau Lakefront Backpackers owner Dean Costello said July was quiet and business was probably down in line with the Paymark data.
"We definitely didn’t have the numbers we had last year, but it was a little more than I was expecting at the end of lockdown. I thought I’d be shutting the door completely.
"We’ve had quite a few tourists who are still on their holiday visas, so a lot of foreigners have come through, but we haven’t had as many Kiwis as we would’ve liked."
Mr Costello said that, provided New Zealand remained Covid-free, he was optimistic business would pick up in the summer, with people coming south on their holidays to visit Milford and go hiking in the area.
Paymark’s other figures showed spending was strong across the retail sector in July.