Tourists are coming back to Aotearoa’s shores, and tourism businesses will be looking at how best to gear up for higher demand. However, having suffered through two years of little to no income, combined with a general shortage of available staff, the question is how can tourism businesses continue to provide a premium experience to visitors?
We’re excited to be able to draw on the extensive sector expertise from our new BDO Southern Lakes & Central Otago firm, as well as our wider network of specialist tourism business advisers, to help businesses successfully respond to this challenge.
Business planning is essential
“Many organisations in this space simply do not have any money at present, but they are likely going to see significant demand very shortly,” explains Richie O’Meara, BDO Tourism Sector Lead and Managing Partner at BDO Southern Lakes & Central Otago. “Tourism businesses need to understand exactly what they have to invest in now to be able to provide that high quality level of service in the near future.”
Many tourism businesses are not going to be able to provide all of the offerings that they used to at this stage – so it’s a good idea to look through past financials to get an idea of where 80% of revenue pre-COVID came from and focus mainly on those services.
“I’ve been working with an events company recently who has had a lot of interest in providing services later in the year,” continues Richie. “They will need to spend a significant amount of money on new kit to provide these events so we’ve helped the business to map out what specific boxes they need to tick to be able to provide those services. We’ve then been working through financial modelling and forecasting and engaging with funders to ensure they can purchase what they need.
Luckily in the South Island the Tourism Kick-start Fund is available, so for businesses who qualify, it’s really about working out how to use those funds effectively – revisiting your business plan and strategic vision is the best way to do this.”
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For South Island businesses that qualify for the Tourism Kick-Start Fund, it's a good idea to revisit your strategic plan to work out how to use the funds effectively.
Staffing top of mind
Michelle Hill, BDO Rotorua Managing Partner, noted that staffing is going to become a real issue for businesses:
“We were disappointed not to see any Government funding going to tourism businesses in the Central North Island, especially as the volcanic activity in Ruapehu may put off some visitors from spending the winter ski season here.”
While some tourism businesses have shut up shop completely, many are going into hibernation. This entails saving costs through only operating at busy periods such as school holidays and weekends.
“Unfortunately, this has led to some having to let staff go, and it’s going to be really difficult when business picks up again in the summer to re-employ those people,” says Michelle. “We’re hoping we get people coming in from overseas who can fill some of those roles, and tourism businesses are really going to have to think about their employee value proposition to ensure they can still attract the right staff. Looking at accommodation options for staff could be a good way to do this, especially to attract those overseas workers.
There’s also a real opportunity for home-grown talent. We’ve got amazing people here in the regions and many of them want to stay close to their families – tourism businesses need to develop ways to quickly upskill new staff to ensure they can continue to provide a quality service.”
Many tourism businesses in the Central North Island are going into hybernation for winter - but they must ensure they can get quality staff when they get back to full operations.
After two difficult years, tourism operators must look after their mental health
“From a mental health point of view, these last couple of years have been some of the toughest that tourism businesses have ever faced,” continues Michelle. “Owners really must make sure they’re still managing to take a break even when business does pick up, and from here it’s really about drawing a line in the sand. Yes it’s been awful, but we’re hopefully at the end of it and it’s time to look ahead, think outside the box, review cash flow and business planning and work out how to deliver your core services and provide a great experience for tourism businesses.”
When times have been tough and you’re looking at how you can take your business into the future, it can help to talk to an independent adviser. Reach out to your local BDO office today for assistance with business planning, cash flow, financials, strategy or even just to talk to someone for business coaching. We also have a broad Virtual CFO offering which enables you to outsource all or some of your finance department – providing expert help to keep business finances on track and leaving you more time to focus on the parts of your business that you’re passionate about.
Tourism is an integral part of New Zealand’s DNA and is a sector that’s at the core of what we do at BDO – helping you achieve your dreams and supporting a thriving New Zealand. We’re delighted to be able to support this vision even further with the onboarding of BDO Southern Lakes & Central Otago, and will have more top tips on how to take your tourism business to the next level to share in coming months.
Our tourism sector experts' top tips to help gear up your business for open borders:
- Develop a business plan to work out what you need to invest in now to be able to meet demand in future
- Use this business plan to guide your conversations with funders
- Focus your offering on where around 80% of your profits came from pre-Covid
- Take the time now to develop an employee value proposition that will enable you to get the best staff once borders open and upskill our homegrown talent
- Draw a line in the sand – review your cash flow and business plan and start looking to the future