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LETS GET DOWN TO BUSINESS.

Question :
Hi,We have a Motel in the beautiful town of Whitianga right on the beach front. As you can imagine we have been hit really hard from the result of Covid19. April we are down 75% and as it stands with May and June currently we will be down 100%.  With a loss of around $50k over that period. Never mind beyond that. I guess we are in limbo with how and when things might change. We have a lease where our landlord is not interested in any help to date. We have emailed with no response. We are going into our 3rd year of our 30 year lease. We have recently updated our website. We have been keeping active online. We know others are really struggling too but with little to no turnover or income realistically how long can we continue for? 30% of guests are overseas travelers and our NZ guests cant travel. Yet. Will the NZ travelers pick up some slack? We had a really good business 5 Weeks ago and boom gone. Do we have any rights with our landlord?Should we expect the NZ Market to pick up?Really worried.Cheers Guys

Question submitted 28/04/20 @ 04:34pm
Industry: Tourism
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  • Hi, what a tough position you are in and is sounds like you are doing the obvious stuff like staying active on line and on social.
    A couple of thoughts from me
    – keep close to your RTO Destination Coromandel as I am sure they will have a plan to target Aucklanders and domestic as soon as people can travel which may only be 2 weeks away now.
    – I think there will be some pent up demand to get away foo a break especially as we have had two long weekends knocked out while we were in lock down
    – it is hard to pick the domestic market that everyone is relying on.. there will definitely be some who have lost their jobs or are felling poor, but there will also be many who have come out of this unscathed who still want to travel and get away for a break, and those who might have gone overseas during winter who will still wan tto go somewhere.
    – you guys are a short drive from Auckland and will be seen as a close and relatively affordable destination to escape to, especially while we cant travel overseas either
    – You may need to adjust pricing to remain competitive and offer value, this may not mean dropping your price but adding something in that creates more value, a bottle of wine, or a discount on stays over 3 nights for example
    – could you collaborate with others, maybe an attraction, mountain bike rental, fishing charter company and bundle a package that it promoted on social media, run a competition maybe to create awareness,
    https://www.facebook.com/groups/647725352678015/?ref=bookmarks this is a tourism industry FB page you can join, there are over 900 members all posting suggestions and articles to help each other out.

    There might be someone on here who can assist with your landlord question from a legal point of view..
    I do hope things pick up for you once we can see a path to level 2 and below, stay strong and best of luck.
    Jason

    Morena – I suspect forward bookings create comfort and hope. So maybe you can focus on hitting some of the target market e.g. in Hamilton and/or Auckland for School Holidays in the July and September holiday periods for Families and/or in the shoulder periods for others – think about who could travel and what packages you can offer for people paying a deposit, and how you might need it to be refundable if the alert levels change.

    On your landlord, this is really challenging – a landlord is still a partner in your business, I would think about how you get them to engage to explain your situation and to ask them for help? Can you ask your local council to help you with this? Who else in Whiti knows the landlord who can speak to them? Also understand and read the terms of your lease – are there any loop holes in that – just be very aware around the landlord’s rights to cancel the lease if you stop paying – there was some comfort provided around timeframes if you are unpaid that was announced by Government – https://www.beehive.govt.nz/release/government-backs-business-through-covid-19 – but the short answer, other tenants have stopped paying their rental payments only to get the landlord to the table, not because they don’t have the money, but because the landlord would not answer the phone – this is a high risk strategy. Best option, get them to talk. If you can’t get them to talk, give them a deadline before you talk to the Council, talk to local paper, find out what other properties they have, who their other tenants are, and see if they are doing the same – it may actually be that they themselves have lots of debt. Good luck.

    Hi there,
    the lease issue is a tough one, and ne felt by many many businesses. As noted above, we are in unprecedented times and both parties (commercial property owners, tenants like yourself) are going to have to share in the pain in order for us to come out the other side.
    Have a read of the Norling law paper on Facebook called “Business Hibernation – Norling Law”. They provide some thoughts on the legalities around suspending or reducing rent on a commercial lease.
    I wish you all the best.

    Good suggestions from Jason, Andy, Thor. On landlord/lease, I think you have to find a way to engage with them. It’s great you’ve made an effort – now can you increase your efforts via email/phone/text to get in touch with them? They will have their own challenges (bank re mortgage etc) and as tough as it is to have that conversation, it’s only by undrestanding pain points on both sides that you can get to something that might work for both sides

    Great suggestions here. I think there is real merit in understanding who else might be in the same position as you with respect to your landlord, and how they are being treated. Perhaps talk to MBBA and other similar business associations. If that info is hard to get, talk to other local moteliers who may be in the same situation as you with respect to long-term leases with their landlords to see how they’re managing. Good luck!

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