Queenstown eatery's outdoor dining fees hiked 1600%

This story was updated on 16 October to add figures from Queenstown Lakes District Council about the increase in its fees for the business that features in this story.

A Queenstown hospitality business owner says the council is hiking the fees he pays to have a few tables outside by almost 1600 percent, and it "doesn't make much sense".

After years of keeping the costs flat in the wake of the destruction Covid-19 wrought on the sector, Queenstown Lakes District Council (QLDC) recently changed what it charges bars and restaurants to use public space for al fresco dining.

QLDC had been planning to increase them in a stepped way before Covid hit, but this year transitioned to what it said was a charge based on market value - 30 percent of the value of the indoor rent.

Blair Impey, who runs two establishments in the tourist hotspot, told RNZ's Checkpoint one of them had paid $3200 a year for the past five years.

"And now the council has rocked up and said it's going to be $51,000… Massive. It doesn't add up maths-wise - I think you would have to sell 60,000 extra drinks there to pay that off."

While there was public consultation on the policy, that did not include the actual fees the council planned to charge.

"It's frustrating that they didn't consult with us about the maths and how that all works… That's the most important piece - the numbers. The rest of it is largely just around the policy rather than what we would actually pay."

"I think they should have consulted with the operators to understand what an increase could look like and how that would work in the ratios of the hospitality business, and then we could plan out over time and how to make the increases that would be considered reasonable."

He said the 30 percent figure the council used should not apply to Queenstown, where it was often very cold and windy, and outdoor dining was not even possible many months of the year. He said the council also had strict rules on using things like outdoor heaters and umbrellas for shelter.

Instead of suddenly hiking the fees, Impey said a "4 or 5 percent" increase each year over time would be reasonable.

"They never communicated to us what they wanted the rent to get to. So as far as we're concerned, we haven't been budgeting for any discount to go away by a particular time. So really, they just need to go to the starting point of where they're at and then build it up over time."

Hospitality NZ chief executive Steve Armitage earlier this month said it was an "almighty shock" for a sector still recovering from Covid-19 and now struggling with the "current economic climate".

"[Outdoor dining] is a real benefit for hospitality business, and one that should be paid for. No one is arguing against paying a fair charge to use public space that is maintained through ratepayer funding.

"The reality of these benefits has been hugely inflated though in QLDC's decision to increase fees for hospitality operators using public spaces."

Armitage said the calculations were made "by assessing indoor rental rates of commercial properties in defined neighbourhoods - not just hospitality businesses, but all businesses".

"Since global retailers likely pay higher rents, the resulting figures are more than many hospitality businesses can afford while staying profitable."

QLDC told Checkpoint it had no plans to review the charges, but was open to having discussions with the hospitality sector. It said the fees had not changed since 2006.

Asked if he had a message for the council, Impey said he would rather not say it on the radio.

"I'm having a meeting with them and I think surely common sense must prevail. It would be a strange and sad day for Queenstown because you don't want the town to look hollow.

"I think many businesses would have quite a challenge to pay this as well… I'm kind of speaking on behalf of lots of operators, rather than just us.

"I think the hospitality industry here needs to get together and make the decision-makers and have a conversation about how the numbers work and work out on something reasonable, which is generally what happens with landlords commercially."

Council's charges were well signalled, it says.

The council gave businesses plenty of notice it planned to raise the fees, it says in a statement.

Councillors voted to adopt the recommendations of a report at a public meeting in January 2019 that signalled an increase in fees for the district later that year, with a further review due in 2020. This further review did not take place due to the pandemic.

A summary of the rates for the location of the specific hospitality business in question are:

• 2006-2019; $80/m2
• 2019-2023; $160/m2 (rate anticipated to increase to full market value at that time @ $550/m2, but delayed by pandemic)
• 2024 onwards; $600/m2 (current market rate)

Impey's business had therefore seen an increase in fees between 2019-2024 of 275 percent, not the 1600 percent, he was claiming, the council said.

 The market rates the council had introduced last May had been assessed by an independent valuer, it added.