Week in Review

From a mountain village, a plea for kindness

A tiny, tourism-focused village asks for help from its local authority which, unusually, is a government department. David Williams reports

Queen’s Birthday weekend was bustling at Aoraki/Mt Cook Village as Kiwis swarmed in to support the struggling tourist hotspot, nestled in a national park straddling the South Island’s mountainous spine.

The Department of Conservation’s local operations manager Sally Jones says visitor centre staff reported one of their busiest days on the till of the year. Similarly, in nearby Twizel, Jones went out for coffee and “almost regretted it”, it was so busy. “I couldn’t believe it.”

Now of course, the visitors are gone.

This snapshot of frenzied activity isn’t the answer, Jones says, but it does paint a picture of some hope for Aoraki/Mt Cook Village.

“Hope” might be an overstatement. There’s no idea when overseas tourists – the village’s lifeblood – can return, as countries grapple with the global pandemic, Covid-19. Meanwhile, price-sensitive Kiwis are demanding deals.

The sprawling Hermitage Hotel and associated properties, which has a footprint occupying about 85 percent of the village, is shut and has reduced staff from 176 to 22 (plus another 20-odd on the second wage subsidy).

Its Chamois Bar will open at weekends from June 12, mainly to show the new Super Rugby competition. Mt Cook Lodge and Motels – at 59 rooms, just a fifth of the Hermitage’s capacity – will re-open next month, with its most basic rooms going for the bargain price of $125 a night.

“Domestic tourism will help in the meantime,” general manager Jason Winter says, “but for The Hermitage it’s about an acceptable loss.”

Aucklander Andrew Hocken, who owns the 25-unit Aoraki Court Motel, says weekends have been good since it re-opened in mid-May but yields are poor.

Aoraki Alpine Lodge owner Tony Delaney says: “Our current room rates are not too different from what they were when we opened in 2005.”

Meanwhile, adventure guide Charlie Hobbs, who has been operating in the national park for 30 years, has no forward bookings. The Old Mountaineers Café, which he owns and operates with wife Mary, had just one table booked in the coming week.

With income slowed to a trickle, and tourism numbers expected to take years to recover, the pressure’s now on the local authority – the Department of Conservation – to trim its budget to the bare minimum.

Last week, at an at-times tense meeting, the town’s ratepayers were presented with a draft budget for 2020-2021 of $865,000 – a $112,000 drop, or 11.5 percent, on the current financial year.

That’s only the first cut, DoC boss Jones says, and there’s wiggle room for more savings. Some variable costs, like how often the rubbish is carted away, can be reduced, she says. But the cost to run the water and sewerage systems, for example, is fixed.

“We’re a business just like anybody else,” Jones says.

Mary Hobbs, of the Old Mountaineers, is furious about an apparent contradiction.

DoC is an arm of a Government which is doling out billions of dollars – including $49,000 in wage subsidy for the café’s seven staff, now reduced to three, plus a guide. Prime Minister Jacinda Ardern has called on landlords to show kindness, and consider rent holidays, or reductions. Yet at a time when, through no fault of their own, Aoraki/Mt Cook Village’s businesses have lost almost all their income, Hobbs accuses DoC of not doing enough.

Sure, the Government has announced a domestic tourism campaign, and a $400 million tourism recovery fund. It is expected to make a further tourism-related announcement today. But, is it paying enough attention to the industry which was, until just recently, New Zealand’s largest export earner?

Hobbs thinks not. “We feel incredibly let down by the Government not following its own advice to be kind, at this time of desperation.”

“The last thing we want is to see anybody go out of business as a result of this.” – Sally Jones

Aoraki/Mt Cook Village is an expensive place to do business. It’s remote – roughly four hours from Christchurch and three hours from Queenstown – so everything is trucked to the end of a very long road. Commercial insurance there is apparently relatively high.

Being a national park, the village’s infrastructure is owned by the Crown, with local body services provided by DoC. Beyond water, sewerage, and rubbish disposal, other costs are flood protection, roads and street lighting, landscaping, and the local fire brigade. Village businesses are also slugged with a rate from Mackenzie District Council.

The department is a reasonable contributor, paying for infrastructure and facilities that visitors need to access and enjoy the national park. But it’s The Hermitage, owned by Queenstown rich-lister Sir John Davies, through company Trojan Holdings, which pays the most in local body rates.

(It’s more complex than that, of course. DoC also collects ground rent for buildings, often taken as a percentage of turnover, as well as myriad fees for tourist activities – the invoices for which were delayed a month.)

DoC collects rates on a “cost recovery” basis, set in a now-outdated plan.

Jones, the local departmental boss, says the actual costs for this financial year, including any Covid-19-related reductions in use, won’t be known until next month, but savings of about $10,000 have already been made.

It is already foreshadowing a drop in operating and personnel costs for next year of $86,000.

However, some costs are essential. “We have a service level agreement under which we must maintain water and sewerage to a certain standard. And, in fact, the water system is barely hanging in there.”

The department has established a national team to consider financial support. Jones says there have been a large number of requests for fee waivers and adjustments to concessions and rent.

“We understand it’s not business as usual,” she says. “The last thing we want is to see anybody go out of business as a result of this.”

However, when asked about businesses with very little income who might be unable to pay DoC because their main customer base has dried up, Jones just says: “It’s a very good question and no one has the answer to that at the moment.”

Lou Sanson, DoC’s director-general, says via email the Government, including his department, is doing a lot to help tourism businesses across the country through the $1.1 billion environment jobs package. Dubbed ‘jobs for nature’, the package was “essentially based on helping failing tourism businesses”, Sanson says bluntly.

A statement in Sanson’s name sent later, from DoC head office in Wellington, is much more diplomatic. It said the department was sympathetic to businesses affected by Covid-19.

“We will continue to look at what additional support might be developed in the future for businesses, however the government is currently investing billions of dollars into wage subsidies, tax relief and other assistance.”

The message seems to be if the Government is to be fair, and consistent, an unfortunate consequence is some businesses will fail.

Aoraki/Mt Cook DoC boss Jones says: “You only need to take a look around the rest of the country, or listen to the news, tonight even, that while Aoraki is a small village, it’s not unique.”

Musings on fairness

Is that fair, though? Or is an inflexible Government, floundering to find a policy to support small businesses, just being equally unfair?

How fair is it, in the wake of a global pandemic, to have an arm of a big-spending Government demand local body rates from businesses that have lost most of their income? Talk of fairness might also seem a little cheap after immigration exemptions were granted for 56 film staff for the movie Avatar.

Adventure guide Charlie Hobbs is fearful the recent Hermitage shutdown means there’ll be a shortfall in the village’s rates budget which will have to be met by small operators.

“If the Hermitage aren’t using the services they won’t have to pay,” he says, adding: “We might do the same thing if there’s a cost to us that’s just not acceptable.”

Jones, of DoC, says The Hermitage will still be the highest contributor to the rates bill. Given the bills for the last quarter of the financial year are still being finalised, she admits it’s a possibility companies which have “underpaid” will face a big bill.

It’s seems like something The Hermitage wants to avoid. Its reputation was knocked last month, when Mackenzie Mayor Graham Smith blasted businesses “which have had a lot of years and a lot of good times” who “want to close down after a month of lockdown”.

The Hermitage didn’t end up cutting as many staff as originally proposed.

Winter, the hotel’s general manager, tells Newsroom he met with DoC separately after last week’s meeting to push for the village’s costs in the coming year to be “the bare minimum we need to open the park and tick all the boxes”.

“There are some bills you have to pay regardless if there’s one person or no people in the park.”

His sympathy for small operators is plain. “As a government department they have a responsibility to investigate how to operate in the future. You can’t be relying on how we’ve operated historically for the last 10 years.”

Delaney, the owner of Aoraki Alpine Lodge, says he hasn’t approached DoC about relief for concession fees. “However, one would think, given a large number of commercial landlords throughout the country have reduced their rents whilst tenants revenues are significantly reduced, it could be argued that a reduction in the percentage charged during the 2021 year would be in line with other businesses and that DoC would be well positioned to effect this.”

Aoraki Court Motel owner Hocken, of Auckland, calls on the department to be more realistic. But his main message is for the Government, whose role, he says, is “opening the borders and letting people come in who don’t have Covid”.

“I think the Government, more so than DoC, has a responsibility to those businesses which are pretty much 100 percent tourist-focused to say, ‘What are we going to do to bring some market back to you?’”

(Hermitage boss Winter says creating a trans-Tasman travel bubble with Australia might help in the short term but can’t be the whole answer. Combined domestic and Australian occupancy at his hotel is “somewhere sub-20 percent”.)

Charlie and Mary Hobbs are DoC’s most strident critics. This should be no surprise, considering the couple’s battles with the department, including a years-long slog to build their café, are detailed in Mary’s pointedly named book Matagouri and Other Pricks. She says: “Over recent times it’s been fairly amenable.”

Mary notes Crown land manager LINZ is giving some relief to tourism operators affected by Covid-19. Meanwhile, DoC has turned down a request from her and her husband for financial relief for their concessions.

The department’s giving barely a ripple in discounts despite the devastating drop in business, she says, which might drive some businesses out of the national park.

It’s a desperate challenge to make ends meet, yet the Government shows “no compassion, no empathy, no kindness.”

“The Government is preaching but it’s not practising what it preaches.”

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