Otago tourism, hospitality businesses struggle with staff costs, coronavirus

One of every two Otago business people thinks business conditions will deteriorate during 2020, and less than 17% are upbeat about future prospects.

About a third of businesses expect conditions to remain the same, although owner-operators were less optimistic than last year; about 70% of businesses expected trading conditions to either stay the same or get worse.

The latest quarterly business sentiment survey by the Otago Chamber of Commerce suggested the local hospitality and service retail sector in particular was concerned about rising staff costs — there have been indications businesses will need to pay ahead of inflation to retain staff.

The majority of the 60 respondents across Dunedin, Waitaki and Central Otago employed between one and 50 staff, and reflected a range of industries.

Chamber chief executive Dougal McGowan said almost half of employers were finding it more difficult to find staff than three months ago, while two-thirds of respondents were worried about the ever increasing costs of doing business.

He said tourism operators were feeling the pinch of coronavirus fears, although this had been ‘‘buffered’’ to some extent by local support for events such as the Queen and Elton John concerts and the Masters Games.

‘‘Many operators are getting lower than budgeted bookings from the cruise lines and also latest disruptions to bookings as a result of flooding had proven to be a blow to areas like Te Anau and the region.’’

The latest Stats NZ data showed annual growth in guest nights easing for South Island regions. Southland reported a 0.5% increase and Otago was static at 0.1% growth.

Tourism spends were up by a nominal 3% and 2.2% respectively while the West Coast was down by 3.6% for the quarter, driven by extreme weather events.

Mr McGowan said on the positive side, the residential and commercial construction and building sector remained fit.

‘‘Consents are up and many building companies are reporting their strongest work streams for a while as homeowners and others move into renovations on the back of lower interest rates.’’

According to the Dunedin City Council’s planning and environment committee, last year was the busiest for processing resource consent applications since 2007 — overall consents jumped 1122 compared with the long-term yearly average of 916.

Building consents were also up in the greater city over the past six months, there being $193million worth of consents compared with $158.7million during 2018.