Southland hardest hit region in hospitality downturn
“All arms of the business were down this period."
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Southland has been the hardest hit region in a hospitality sector that has a seen a drop in spending right throughout the country.
Invercargill Licensing Trust CEO Chris Ramsay’s has pointed to Stats NZ data released on October 4 which revealed hospitality spending was down right across the country with Southland seeing the largest downturn.
Southland had 11.8% drop in spending last month, with South Canterbury the next hardest hit region with a 7.4% reduction.
ILT is the biggest player in the Southland hospitality scene.
The community-owned ILT organisation owns 23 hospitality businesses. It includes accommodation, bars and restaurants, conferences facilities, liquor stores, neighbourhood taverns, and catering.
For the four-week period ending September 29, ILT’s total sales were $8.1m which was a drop $625,568, or 7.1%, on the same month last year.
“All arms of the business were down this period,” Ramsay says in his monthly report on the ILT’s finances.
Ramsay said ILT’s decline in sales was not only the result of the national downturn, but also due to a lack of large conferences again in Invercargill in September.
“Last year this period featured the Cancer Society Ball, Davis Cup tennis, Connexis, and the national Literary Conference.
“This year included Rocking with the Stars (ILT Stadium Southland), ILT’s 80th dinner, Night and Day conference and Export Awards,” Ramsay says.
“A run of bad weather and cool temperatures not only kept people away from our bars and restaurants, they also dampened Off Premise sales over September.”
ILT has also reviewed its sales performance for the six-month period up to September 29 which shows its sales a down.
Total sales for that six-months were at $49.5m which is down 2.9%, or $1.46m, on the same period last year.
“Large events and conferences are crucial to our business. While we have secured several medium and smaller events in the first six months of the year, we need a consistent number of large, multi-day conferences to meet our targets,” Ramsay says.
On top of the almost $2m decline in sales at the mid-point of the financial year operating expenses were not dropping in line with that.
“Almost every cost line is up on last year, showing the effects of the general increase in costs that every business and household is facing,” Ramsay says.
“It is important to note that some of these costs are controllable and could have been cut. We acknowledge that we have invested more in driving future revenues (attendance at trade shows, hosting famils and general advertising and promotion), preferring to take a long-term view of improving sales rather than a short-term cost-cutting approach that would slow our recovery.”
Despite the challenges Ramsay pointed out its combined gross profits are in line with budget from a percentage perspective, and slightly ahead of the same six-month period last year, which was a good result.
While ILT has scale on its side to help navigate its way through the drop in hospitality spending in Southland, smaller hospitality operators don’t have that.
Last month the Meccaspresso Cafe in Tay St in Invercargill closed after eight years in business.
Meccaspresso Cafe operated next to Motorcyle Mecca.
At the time owner Brenda Hayes pointed to various reason behind the closure, and asked people to support those in hospitality.
“Remember to support those small owner-operated cafés and restaurants around town.
“These people put everything on the line to provide for their staff & their families, but also to provide a service to their customers.”