The hospitality industry in New Zealand has long been a cornerstone of the country’s economy, playing a pivotal role in both employment and tourism. As we progress through 2024, the industry is experiencing a period of dynamic change, marked by both growth and significant challenges. Understanding these trends is crucial for businesses looking to navigate the current landscape effectively.
Employment Growth Amidst a Competitive Landscape
One of the most striking developments in New Zealand’s hospitality sector is the robust growth in employment. As of March 2024, the industry employed approximately 145,000 people, representing a 7.3% increase from the previous year. This growth is particularly noteworthy given the relatively stagnant increase in the number of hospitality outlets, which grew by only 0.1% during the same period. The employment surge has positioned the hospitality sector as the seventh-largest employer in New Zealand, highlighting its critical role in the labor market (Restaurant Association of New Zealand) (Stats NZ).
Sales Growth and Rising Costs: A Double-Edged Sword
The hospitality industry has also seen an encouraging rise in sales, with revenue reaching $15.7 billion for the year ending March 2024. This 5.8% increase from the previous year signals a rebound, likely driven by the return of international tourism and domestic consumer spending. However, this growth is not without its challenges. Operational costs have risen sharply, with menu prices increasing by 6.4% and inflation hovering around 4%. These factors have squeezed profit margins, making it more difficult for businesses to capitalize fully on the increase in sales (Hospitality.org.nz).
Regional Variations: Winners and Losers
The impact of these trends is not uniform across the country. Some regions, like Gisborne, have benefited significantly from the industry’s growth, with a remarkable 20.6% increase in sales. This uptick is likely due to its popularity as a tourist destination and its ability to attract visitors both domestically and internationally. On the other hand, regions such as Northland, Taranaki, and Wellington have faced declines in sales, highlighting the uneven recovery and the challenges some areas continue to face (Restaurant Association of New Zealand).
The Cost of Recruitment: An Emerging Challenge
As the industry grows, so does the demand for skilled labor. However, with the increasing competition for top talent, businesses are finding it more challenging—and expensive—to recruit and retain employees. In New Zealand, the cost of recruitment typically ranges from 10% to 25% of a candidate’s first-year salary. This can represent a significant investment, particularly for small to medium-sized businesses operating on tight margins. Additionally, hidden costs such as job advertising, onboarding, and the potential loss of productivity during the hiring process further add to the financial burden (iCalculator™ NZ) (IBISWorld).
Preparing for the Future: Strategic Staffing
As businesses look ahead to the busy spring season, effective staffing will be more important than ever. With customer demand expected to rise, ensuring that your business is adequately staffed with skilled, motivated employees is key to capitalizing on this period. Given the current market conditions, many businesses are turning to low-cost and efficient recruitment solutions to meet their staffing needs without compromising on quality.
In conclusion, while the hospitality industry in New Zealand is showing signs of recovery and growth, businesses must remain vigilant in managing the associated challenges. By staying informed about industry trends and adapting to the changing landscape, hospitality businesses can position themselves for success in 2024 and beyond.
Looking to Hire with the Spring-Summer Season Approaching in 2024?
We specialise in recruitment in the Hospitality industry and have some excellent candidates on our books, who are skilled and expereinced across a diverse range of professions within the hospitality industry.
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