Queenstown risks reputational damage

Labour shortages aren’t just a short-term problem for Queenstown – they risk damaging the entire reputation of the New Zealand tourism sector. If people go home not having been able to wine, dine, and play how and when they want, then people won’t wax lyrical about New Zealand to their friends and family when they return home.

It was a pleasure to talk to Tracey Roxburgh of the Mountain Scene to put these challenges in perspective, including how we have already lost $3 million from our inability to fully service visitor demand. Tracey’s article following our interview is republished below and can be found here.

This past June, there were 150 fewer jobs in Queenstown’s hospitality industry compared to June, 2021, a time when there were limited international visitors.

The latest labour market snapshot report, prepared by Arrowtown economist Benje Patterson, shows the number of people on employer-assisted visas has dropped over that same period from 1363 to 1073, Jobseekers — those deemed ‘‘work-ready’’ — have dropped from 291 to 195, but there are 316 more jobs in the district.

And, 78% of businesses say they’re having trouble finding skilled or specialist workers, compared to 56% last June, while 57% are having trouble finding unskilled workers, up from 46% last year.

Patterson says that’s part of the reason the district experienced 10% per annum wage growth last year — the national average was 5.8% — and is also responsible for employee ‘‘churn’’, or the movement of people between jobs.

While exact numbers are hard to determine, and it’s too hard to speculate what it might be at present, pre-Covid, Patterson says, Queenstown’s churn was a quarter of all jobs in every quarter — across NZ, that was one in every six or seven jobs.

Queenstown’s high churn was partly due to the seasonal nature of the workforce, or because of employee’s personal circumstances.

Now, however, the churn’s also due to people leaving jobs for higher wages or better conditions elsewhere, or because they’re burnt out.

‘‘Even if churn isn’t higher, it still is a real problem because we’ve got such low levels of employment at present in the tourism sector, relative to pre-Covid, the demand has come back ferociously, any churn is problematic for us,’’ Patterson says.

‘‘It’s just counter-productive.’’

While wage growth is flattening slightly — in June it was running about 9% — Patterson says that’s indicative of margins being squeezed.

‘‘There’s only so much ability to pass on price increases to your customers, so you eventually reach limitations.

‘‘Trying to find workers with a chequebook is, long term, a fool’s game.

‘‘It’s not going to work.

‘‘It helps in the short term, it helps the worker, but it’s not going to solve the problem.’’

He points to specific industries driving wage growth, particularly labour temping, where numbers suggest people are getting ‘‘close to 20% wage growth’’.

‘‘For me, that’s a real canary in the coal mine.

‘‘That’s your pressure release valve.

‘‘If that’s going off the charts … there’s a real problem there, there’s something wrong.’’

Patterson’s previously been reported as saying about $3 million in ‘‘unmet demand’’ was left lying on the table in June in Queenstown.

While the rest of the country’s attitude’s been ‘‘cry me a river, Queenstown’’, he says it will become an ‘NZ Inc’ issue if the country experiences reputational damage as a result.

‘‘If people leave [Queenstown] being like, ‘hey, it was like the 1950s in NZ, everywhere was shut by 7pm, you couldn’t get a meal on a Monday’, they’re not going to go back saying, ‘NZ was awesome … you need to get there ASAP’.

‘‘We want [visitors] to have an exceptional experience so … that it’s a consistent recovery based on reputation.

‘‘We’re going to need that if we want to ultimately, as a destination, be one that extracts as much value as we can out of visitors.’’

The original article by Tracey Roxburgh of her interview with Benje Patterson, which appeared in the Mountain Scene, can be found here.