Business Confidence Survey paints a grim picture.

Business Confidence in the Wakatipu is expected to deteriorate significantly in the next three months according to the results of a recent survey of 241 local businesses on business sentiment, economy and key indicators of business success. 

83% of all Wakatipu businesses, rising to 93% of tourism & hospitality businesses, expect the region’s economic situation to deteriorate in the next three months, with almost a third of businesses in Queenstown alone not expecting to survive the period.

The key messages from the survey for the Wakatipu are:

• Businesses have been significantly impacted in the past three months and most expect significant deterioration in the coming three months
• While many businesses are operating at reduced capacity, there are marked differences in experience between Arrowtown, Frankton and the CBD
• As expected, results for the Tourism & Hospitality sector are worse than average
• A Trans-Tasman bubble is critical to many of these businesses' future survival, with almost a third of CBD businesses unlikely to continue beyond the next three months without it
• While demand or number of customers is the single most limiting factor for growth in the Queenstown CBD and for Tourism & Hospitality, attracting skilled staff and business capacity are major factors for Arrowtown and Frankton businesses.

Conducted in conjunction with the Wanaka Chamber of Commerce and supported by Destination Queenstown, Lake Wanaka Tourism and QLDC, the survey was open to all businesses across the district.

Businesses view of the future for the region contrasted significantly with their view for New Zealand, with almost 75% considering the outlook for the country would remain the same or improve.

The survey revealed a very different story for Arrowtown and Frankton, as compared to Queenstown, with all Arrowtown businesses and 97% of Frankton businesses expecting to still be trading in three months.

When it comes to business capacity, two thirds of Arrowtown businesses continue to operate between 50-100% capacity and in Frankton this proportion is echoed with 2/3 operating at over 50% including 11% of businesses operating over capacity >100%. 

In contrast, 64% of businesses in Queenstown are operating at less than 50%, with 1.6% not operating at all.  This increases to just over 80% for tourism & hospitality, including 2.6% not operating.

When asked what impact an open travel border with Australia would have on their current business level, the story across the Wakatipu is again markedly different, with almost a third of Arrowtown businesses expecting no impact (or that business would stay the same), almost a third expecting an increase of up to 25%, and almost another third an increase of up to 50%.  When only tourism and hospitality businesses were considered, 50% expected an increase of between 26-50% and a third to increase by up to 25%.

In Frankton, 28% of all businesses expected an increase of over 50% which increased to 55% of all tourism & hospitality businesses.

In Queenstown, 18% of all businesses, increasing to 26% for tourism and hospitality, expect an increase of over 100% once the border opens with Australia.  A quarter of all Queenstown businesses expect an increase of up to 25%, which drops to 13% for tourism & hospitality. 

70% of all businesses across the region (including Upper Clutha) expect an increase of between 25 and 100%, showing just how big an impact this will have.  This increases to 98% of the region’s tourism and hospitality businesses expecting an increase of over 25%. 

74% of the region’s businesses cited demand or number of customers was the single most limiting factor to growing their business, which rose to 89.55% for tourism & hospitality.  Again, local fluctuations were significant, with 23% of Arrowtown businesses claiming accessing skilled staff was their biggest constraint.  A quarter of Frankton businesses cited the lack of skilled staff (14%) or capacity constraints (11%), whereas 80% of Queenstown businesses highlighted demand, increasing to 90% for tourism and hospitality.

The challenges in finding skilled staff were further reinforced with 30% of Arrowtown businesses, 43% of Frankton businesses and 53% of Queenstown businesses reporting they were harder to find than it was three months ago.  Around 2/3 of all Wakatipu businesses considered it was the same to find unskilled staff.

Across the region around 50% of businesses had not given a pay rise to their team in the last three months and around the same number said they did not plan to give one in the next three months either.

Wages were another area with local fluctuations, with wage reductions being reported by 11% and 13% of Frankton and Queenstown businesses respectively, which increased to 22% and 18% in tourism and hospitality.  18% of Queenstown hospitality businesses and 22% of Frankton businesses are also expecting to decrease wages in the next three months.

Two thirds of the region’s businesses have seen reduced activity over the past three months and almost three quarters, reduced profits.  A third have decreased prices while over 80% are reporting the cost of goods sold remain the same or have increased.  

Consistent with results across all the survey, the Wakatipu has fared worse than the region over the past three months, with tourism and hospitality significantly impacted.

The outlook continues to be bleak, particularly in the Wakatipu, with businesses expecting operations to deteriorate further in the coming months.  41% are expecting to reduce staff numbers in the face of continued decreases in activity and pressure on prices compounded by over 90% of businesses expecting cost of goods sold to remain the same or increase.

The survey was completed by 241 businesses in the Wakatipu. Of those that completed the survey, the majority were based in Queenstown at 187, with 35 from Frankton, 13 from Arrowtown, and 6 businesses from Glenorchy. 

Of the Queenstown businesses, 76% had been in business over 5 years as were 62% of Arrowtown businesses responding and just under half the participating Frankton businesses.    

Of the 241, 136 were identified in the tourism, hospitality, or accommodation sector.

The next Southern Lakes Business Confidence Survey will be distributed week commencing 3^rd May.

*For the purpose of the survey, tourism & hospitality businesses include accommodation, hospitality, tourism operators and activities.