Richie O'Meara
Advisory Partner, Managing Partner BDO Southern Lakes & Central Otago, National Tourism Sector Leader
New Zealand’s tourism sector has faced many challenges in the past few years, with COVID-19 creating lasting damage that is being exacerbated further by tough economic conditions. As a result, our survey shows tourism leaders are feeling less positive about their business performance and wellbeing than they were in October 2023, with current business performance sentiment at a record low. However, the tourism and hospitality sector is extremely diverse and some businesses are faring better than others.
View journalist Paddy Gower's conversation with Richie O'Meara, BDO Tourism Sector Leader.
Business performance sentiment is at its lowest level in five survey waves, with just 43% of tourism business leaders feeling positive all or most of the time about their business performance in the last two weeks. This has dropped from 71% in October 2023 and is reflected in future business performance sentiment, which has declined from 79% in October to 66% in our March survey.
Looking at the drivers of this negative sentiment, it’s clear that, like other sectors, tourism is being hit hard by tough economic conditions. This is the business performance attribute they have felt least positive about in the past two weeks, followed by political factors and their climate risk management profile. This is similar to the sector’s future outlook, with tourism leaders also expecting to feel less positive about cash flow in six months' time.
On a positive note, the continuing recovery in international visitors has been a welcome relief for many businesses as domestic household spending remains weak. Otago and the Central Lakes regions have seen a rising number of visitors from high-spending markets, including the US. And while future business performance sentiment is down on previous years, it is a significant improvement on current positivity levels, suggesting tourism and hospitality businesses feel that there is hope on the horizon.
While tourism leaders’ wellbeing has decreased since our October 2023 survey, the WHO-5 Wellbeing Index score of 58 is in line with levels in surveys prior to this. This reflects what we’ve seen throughout the survey, where leaders experienced a spike in positivity in the weeks following the election, only to now be ‘back to reality.’
The main drivers of negative wellbeing for tourism leaders in the past six months have been business financial concerns, not having enough people to rely on for support, and high workloads. With economic pressures expected to be an ongoing concern, it’s no surprise that finances are creating headaches for leaders.
Thankfully, labour supply challenges are not creating negative wellbeing for tourism leaders, with just 10% saying this factor has negatively impacted their mental health in the past six months. There is suggestion that staff have been easier to find, staff turnover is less of an issue, and some businesses have been able to reduce pressure on wage increases.
Richie O'Meara