Confidence shaken by rising costs
The first three months of 2023 left many Queenstown Lakes business owners and managers feeling downbeat about the road ahead.
Cost pressures, staffing, housing for staff, and the overall economic landscape all impacted confidence, according to the Queenstown Business Survey Q1 2023.
Eighty businesses responded to the survey, which was published last month. Only about a quarter expected conditions to improve for their business. The same number expect conditions to deteriorate, while roughly half expect them to remain the same.
Recruiting staff was again a major headache, with 38% of businesses saying it was the single biggest factor limiting growth.
And lack of accommodation for workers was cited as a new limiting factor by 13% of businesses, as the pressure ratchets up on the rental market.
During the busy summer, the arrival of working holiday visa holders had enabled businesses to staff up a little, and 71% of businesses were now operating over 75% capacity.
However, with costs still rising due to inflationary pressures, profits were expected to decline over the shoulder season.
Arrowtown economist Benji Patterson says: “The reality is that businesses can’t push up their prices to the extent that their costs have increased.
“This is a concern for me in a potentially recessionary environment, particularly when in the shoulder season businesses are chasing more of the domestic dollar ahead of the winter Aussie influx.”
Confidence in New Zealand’s expected economic conditions was bleak. Fifty of the businesses (62.5%) expected conditions to deteriorate across the country, while only six reckoned they’d improve, with 23 expecting them to remain the same.
For Queenstown Lakes, as you would expect, the numbers were very similar to the confidence respondents had in the conditions for their own business, with about a quarter expecting deterioration, a quarter improvement, and half expecting no change.
More than half the businesses expected to have to increase wages over the three months following the survey; April, May and June. And 63% had increased wages over the first quarter.
A whopping 92% of businesses surveyed said they’re paying their employees at least the living wage, which is $23.65 per hour.
Queenstown was the primary location for 46% of respondents, with 32% in Wānaka, 20% in Frankton/Remarkables Park/Five Mile/Queenstown Central, 12% in Arrowtown, and the remaining in Glenda Drive, Glenorchy, Kingston, Glenda Drive and Cromwell.
The vast majority, 80%, have been in business for more than five years, but there were three new businesses that responded.
