The recovery of New Zealand's hospitality industry is facing challenges. Although the second quarter of 2023 reported a growth rate of 9.8 percent, notably, menu pricing has also risen by a comparable percentage of 9.2 percent, playing a significant role in this growth and reflecting necessary price adjustments
The data, collected by Stats NZ, highlights the regional performance during Q2 2023 compared to the same period in 2022.
- Northland Region: 0.7 percent growth, with a 5.1 percent decline compared to the previous quarter (Q1 2023).
- Auckland Region: 10.2 percent growth, accompanied by a 2.4 percent increase compared to Q1 2023.
- Waikato Region: Steady 12.8 percent growth and a 6.3 percent rise compared to Q1 2023.
- Bay of Plenty Region: 6.2 percent growth, although experiencing a slight dip of 0.9 percent compared to Q1 2023.
- Gisborne Region: 19.5 percent growth, along with a 23.0 percent increase compared to Q1 2023. This region was impacted heavily by flooding and the cyclone in the first quarter.
- Hawke's Bay Region: Strong growth of 12.0 percent, with an 11.4 percent increase compared to Q1 2023. This region was also impacted heavily by flooding and the cyclone in the first quarter.
- Taranaki Region: Facing challenges with a decline of 13.2 percent, compounded by a 10.4 percent decrease compared to Q1 2023.
- Manawatu-Wanganui Region: 5.4 percent growth, along with a modest 0.8 percent increase compared to Q1 2023.
- Wellington Region: 4.6 percent growth, though experiencing a slight downturn of 1.1 percent compared to Q1 2023.
- West Coast Region: Striking 22.8 percent growth, offset by an 18.5 percent decrease compared to Q1 2023.
- Tasman Region: A 4.7 percent growth rate, coupled with a 15.3 percent decline compared to Q1 2023.
- Nelson Region: 9.5 percent growth, while witnessing an 8.8 percent drop compared to Q1 2023.
- Marlborough Region: 6.8 percent growth, with an 8.2 percent decrease compared to Q1 2023.
- Canterbury Region (excluding Kaikoura): A strong 13.9 percent growth, with only a marginal 0.1 percent decrease compared to Q1 2023.
- Otago Region (excluding Queenstown-Lakes): 10.6 percent growth, with a minimal 0.3 percent decrease compared to Q1 2023.
- Queenstown-Lakes: Noteworthy 30.0 percent growth, tempered by a 15.5 percent decrease compared to Q1 2023.
- Southland Region: 17.6 percent growth, offset by a 10.7 percent decrease compared to Q1 2023.
- Total New Zealand: An overall growth rate of 9.8 percent, with a slight 0.3 percent increase compared to Q1 2023.
These regional variations reflect the complex interplay of economic factors and local conditions.
Some regions, such as Kaikoura (37 percent), Queenstown-Lakes (30 percent), and West Coast South Is (22 percent), experienced substantial sales growth. These are tourist areas that struggled when borders were closed but have rebounded with the reopening.
While the overall growth is promising, it is essential to consider several factors influencing these figures:
In the same period in 2022, the entire country was under the Red traffic light setting until the 14th of April, followed by Orange in April, May, and June, which significantly impacted operations. Menu pricing has increased by 9.2 percent, which accounts for a substantial portion of the growth and reflects price adjustments.
The current landscape includes increasing labour costs, which have risen to an average of 38 percent, a 12.5 percent surge in food prices, including a 22 percent escalation in fruit and vegetable prices, and an 11 percent uptick in meat, poultry, and fish prices during the 12 months leading up to June 2023. These factors pose significant challenges, putting pressure on profitability despite the growth in sales.
Business owners continue to be concerned about future business conditions. According to feedback from Restaurant Association members, a mere 20 percent anticipate an improvement over the next 12 months, with factors like the recession, upcoming election, and impending legislative changes causing unease.
Employers also want to see more done to tackle inflationary pressures, with the initial impact already being felt through adjustments to customer discretionary dollar spend as well as forcing menu price adjustments.
"The adverse weather conditions have significantly affected our revenue this year, and as we approach the crucial summer trading season, it is essential for our industry to rebound with strong results. Additionally, tourism statistics will play a pivotal role, and we are hopeful that the necessary measures have been taken to attract tourists back to our country during the upcoming summer period,” said Marisa Bidois, CEO of the Restaurant Association.
“With our current challenges in mind, we urge the incoming government to collaborate in building a focused pathway for revitalising and positioning the hospitality sector for the future.
Bidois added that despite being a significant contributor of over $14 billion to New Zealand's economy, there are few policies that actually address the industry specifically. Challenges such as worker shortages, changes in worker visa accreditation requirements and cost increases must be addressed. Additionally, there is a call for greater recognition of hospitality's role in tourism and a balanced regulatory environment that supports both business growth and employee well-being.
