Christchurch Hospitality Sector Sees 7% Spending Increase

Hospitality businesses in Christchurch are experiencing a notable increase in spending, which may indicate a shift in consumer confidence amidst the ongoing cost of living challenges. According to data from Hospitality New Zealand, spending in food services and commercial accommodation rose by 7% in August 2023 compared to the same month last year.

Interim Chief Executive Nick Keene highlighted that this increase in spending is one of the highest rates seen nationwide. He expressed satisfaction that the growth appears to be locally driven, suggesting that households are feeling more confident and willing to spend at hospitality venues. “The number of hospitality businesses across accommodation and food services also saw a moderate lift of 1.5% compared to the same time last year,” Keene noted. He emphasized that the passion for the industry remains strong, countering the prevailing narrative that the hospitality sector continues to struggle.

Sector Resilience Amid Economic Challenges

Keene acknowledged that venue closures are more visible in the hospitality sector than in other industries, yet he observed that new establishments are frequently opening. He pointed out that the pressures faced by tourism and hospitality in recent years have led to some owners exiting the industry and a consolidation of business groups. Economic challenges have affected business confidence, resulting in a churn of ownership. “Things seem to be settling as we head towards next year, but there is still a way to go until owners regain their confidence in investment and future growth,” he stated.

Business leaders, including Jeremy Stevens, President of the Hospitality NZ Canterbury branch, are optimistic about increased spending in the coming year. The anticipated opening of the metro sports center is expected to attract more visitors to the city. Additionally, conference bookings at Te Pai and the unveiling of Christchurch’s new 30,000-seat indoor stadium, Te Kaha, are projected to enhance accommodation and foot traffic in the central city.

Another positive development is the $150 million renovation of the former Rydges Hotel into a five-star Sheraton hotel, which has remained vacant since the earthquakes. This investment signifies a commitment to revitalizing Christchurch’s hospitality landscape.

Cost Pressures and Future Outlook

Despite the growth in spending, Keene cautioned that cost pressures on hospitality businesses remain significant. Rising rents, electricity and gas costs, along with increased prices for goods, continue to challenge the sector. While profits from rising agricultural prices in milk and red meat are flowing into local economies, hospitality businesses are wary of the impact on menu pricing. Keene remarked, “Higher prices have put pressure on primary produce inputs for hospitality,” emphasizing the delicate balance businesses must maintain between covering costs and keeping prices affordable for customers.

He further explained that while farmers may have increased cash flow, it does not guarantee that the wider customer base is willing to pay higher prices for their preferred cuts of meat. The national hospitality scene remains a mixed bag, with some areas thriving while others continue to face difficulties.

Overall, the hospitality sector exhibits cautious optimism for gradual improvement as it heads into 2024. With expectations of increased tourism and visitor numbers, the industry remains hopeful for a boost in business. Motel owners have reported a decrease in the number of motels available on the market, indicating a potential tightening of supply that could further benefit the sector.