New survey reveals hospitality sector 'increasingly pessimistic' about state of economy

Hospitality businesses say they're feeling "increasingly pessimistic" about the state of the economy. 

The Restaurant Association's latest survey found 39 percent of owners believe business conditions will get worse in the next 12 months.

Skills shortages are still a problem with 52 percent of respondents short-staffed and nearly half cited managing wage costs as the biggest challenge affecting their business.

Also, almost 30 percent said supply chain price increases are having a significant effect.

Perch corner bar in Auckland's Britomart is a picture of breezy, easygoing hospitality, but behind the scenes it's anything but that for owner Krishna Botica. 

"When you have pressure with wages, pressure with staffing and sourcing of staff you still have to find your customers as well. And when you have intense pressure like we have at the moment it's a struggle," Botica told Newshub. 

A struggle that's being felt across the industry as a new Restaurant Association survey has found. 

"Increasing costs, we're seeing that quite a bit and that includes wage costs and ingredients as well, but there is also talk of the skills shortage as well and the pressure that's putting on our businesses," said Restaurant Association chief executive Marisa Bidois. 

While it might seem to contradict the latest data from Stats NZ showing an 8.9 percent annual increase in filled hospitality jobs in the year to March, there is an explanation.

"That's coming off quite a low base through the period that was impacted by Omicron, and then before that, COVID," Stats NZ senior manager Paul Pascoe said. 

There are signs staffing could improve thanks to strong migration but ASB senior economist Mark Smith said inflation and other economic challenges are affecting discretionary spending.

"New Zealanders are really up against it at the moment. The cost of living remains heightened for a lot of households, those bills seem to be going one way, and that's up, unfortunately," said Smith. 

If economic conditions don't improve, the hospitality industry warns some simply just won't be able to survive, and empty spaces in the central city provide a snapshot of what could be.

"Oftentimes hospitality is a barometer of the economy, we're very sensitive to discretionary spend, so if there is any change in that, our businesses will feel it," Bidois told Newshub. 

"We're definitely feeling that at the moment, people are making those decisions around their discretionary spend, as well as businesses, for those of us who are in the CBD are definitely tightening their purse strings," Botica told Newshub. 

And if those purse strings get too tight it's businesses like Perch and its workers who pay the price.