Fears grow for Queenstown's survival

The danger for Queenstown is a skills drain, as people move away in search of work. Photo: ODT...
Photo: ODT files
Queenstown's shops, restaurants and tourism operators could be boarded up by the time overseas visitors can return to the tourist resort, the district’s mayor fears.

New research commissioned for the Treasury shows Otago and Southland are among the four regions expected to be most negatively affected by Covid-19.

Otago was clearly the worst impacted due to the reliance of Queenstown on now almost non-existent overseas tourism.

Jim Boult. Photo: ODT files
Queenstown mayor Jim Boult. Photo: ODT files
Queenstown Lakes Mayor Jim Boult said the research came as no surprise, and businesses in Te Anau, Wanaka and Queenstown were all hurting.

"Events in Australia and closer to home in the past couple of months have put paid to any hopes of a transtasman bubble in the short term and there are some long faces around town," he said.

"I spoke to someone this morning who said they were losing staff due to uncertainty about their stability going forward.

"They want to work and they want to be busy but things are really, really quiet."

Although the report predicted Queenstown’s GDP could rebound with a 6.4% increase between 2022 and 2025, Mr Boult feared many businesses might not survive to share in the region’s recovery.

"If things carry on the way they are going, we are going to have boarded-up shops, closed restaurants and inactive tourism businesses, and when tourists do finally come back, we are not going to have anything to sell them.

"We won’t have the people, we won’t have the businesses."

Mr Boult said he had been speaking to government ministers, particularly Tourism Minister Stuart Nash, about the region’s plight and the possibility of more financial support for businesses.

"If they can at least keep going in the short term with reduced staff, it might be possible to ramp up again when the time is right ... they haven’t told me no yet and I am going to keep on pushing."

The research, commissioned by the Treasury from Infometrics, also predicted that the South might not start to recover from the economic shock caused by the pandemic until after 2025.

Southland was predicted to be particularly slow to show improvement due to the anticipated closure of a major regional employer, the Tiwai Point aluminium smelter.

Broken down by regional council area, Otago was predicted to experience a 3.3% drop in GDP from March 2020 to 2022 — the highest in New Zealand.

It was also predicted to bounce back strongly with a 3.4% GDP rise from 2022 to 2025, although that was dependent on overseas visitors returning to the region.

Southland’s predicted GDP drop of 1.9% ranked fourth-highest in New Zealand, and its expected 1.5% recovery was the joint second-lowest.

"The likely closure of the smelter will have negative flow-on effects for the broader regional economy and constrain employment and economic growth," Mr Boult said.

"It is also worth emphasising the importance of international tourism to the Fiordland area of Southland."

Reducing the data to territorial authority showed the impact on the South in starker detail — the anticipated 24.8% drop in the Queenstown Lakes district’s GDP was far and away the highest in the country.

Tourism accounted for 56% of the region’s economic activity before Covid-19, the report said.

"Although increases in domestic travel have helped pick up some of the slack, spending by New Zealanders will not come close to filling the hole caused by border closures," Mr Boult said.

"Queenstown Lakes’ workforce is significantly overrepresented in accommodation and food services, construction, retail trade and arts and recreation services."

Mr Boult said domestic tourism had been a welcome confidence booster for Queenstown, but after an initial surge in business, visitor numbers had dropped away to near nothing after people had returned to work.

"There was a sugar hit over Christmas and New Year but since the second week of January, it has simply died.

"Long weekends like the one we have just had certainly put a shot into it, but I’ve had a ring around a bunch of tourism operators and restaurateurs today and there are just no bookings at all placed.

"We are in for a very cold rest of 2021."

The Mackenzie district ranked second with a 19.8% fall, and Southland was eighth with 2.9%.

Invercargill city’s percentage drop was expected to be 2.7% and Central Otago’s was 1.4%.

Dunedin was tipped for a moderate 0.3% fall.

Comments

There is work for all these potential redundancies. The best support package for Queenstown is to finance the reskilling and relocation of at-risk employees. We need truck drivers (Men and Women), fruit pickers (North and South), farm hands, forestry. Our economy is very robust and Queenstown needs to look outside of the box. Some companies like Ngai Tahu have been gifted a tax-free base on business profits, as well as getting employee subsidies. If a business has to fold then sadly that's how markets work. Queenstown has for a long time been an expensive Disneyland for regional visitors rarely affording the thrills on offer. Perhaps a wind-back will be for the better - except Jims town has pretty much been ruined already.

The term zombie business has been used and I think the tern zombie town may apply. Perhaps some of the region's super wealthy could help out some of the struggling? The millionaires certainly don't deserve any taxpayer-funded handouts and the ridiculous property prices taking a drop isn't the worst concept, it's a bubble popping. Many years of growth and wealth generation being reset.

Certainly agree there should be some assistance for New Zealand employees and a wage subsidy for small business owners who have failed, while they find new employment. But please put an end to this nonsense, that subsiding the big end of town is somehow for the greater good.
Many of these people who have got their hands out were decrying Government interference in the management of their business pre-Covid and now want Mum and Dad tax and ratepayers via the Government to prop them up while they wait for the tills to ring again.
They should let live by their own credo and let the market decide if their business or holdings are viable - and if not, let the market decide what the current value is.

Multi-strains of the virus and sporadic and ineffective vaccine programs mean that restricted flights and quarantine borders are with use for 2-3 years and mass international tourism is several years away.

The handout mentality is also over with $100b spent in the first wave there is NOTHING left in the govt coffers for ongoing subsidies. The Queenstown mayor and Queenstown businesses need to acknowledge reality, and retune their offerings for local residents and NZ based tourists.

Queenstown has regularly adapted and thrived - there DOES need to be changes to cater for the "new normal" - and it's time for businesses to start the transformation to local products and local tourism.

Our journalists are your neighbours

We are the South's eyes and ears in crucial council meetings, at court hearings, on the sidelines of sporting events and on the frontline of breaking news.

As our region faces uncharted waters in the wake of a global pandemic, Otago Daily Times continues to bring you local stories that matter.

We employ local journalists and photographers to tell your stories, as other outlets cut local coverage in favour of stories told out of Auckland, Wellington and Christchurch.

You can help us continue to bring you local news you can trust by becoming a supporter.

Become a Supporter