PRICE CONTROL ON HOTELS

Press, Volume XC, Issue 27308, 26 March 1954, Page 10

PRICE CONTROL ON HOTELS

EFFECTS *DISCUSSED BY MINISTER

REPLY TO CLAIMS BY INDUSTRY

In a statement today referring to recent “press editorials and reported statements of one or two experienced hotel operators,” the Minister of Industries and Commerce (Mr J. T. Watts) says it is not correct that “there is no return on the capital invested in the hotel business and that no improvements are being made in hotel buildings and amenities.” The editorials and reported statements referred to the effect of price control on the availibality of highstandard hotel accommodation.

“It has been said, in effect, that expansion of hotel services will not occur until the control is removed and that, as a consequence, we are losing the opportunity to earn much-needed overseas exchange, particularly dollars,” said the Minister.

“It would not be proper for me to express any opinion about control or decontrol of hotel tariffs at the present time because the general subject of control is coming before the Price Tribunal within a few days, but I would like to draw attention to another side of the picture from that which has appeared in the columns of the newspapers.

“I think there would be no argument about the point that capital invested in a hotel business, and for that matter in any other business, should not be prevented from earning a return—a fair return. I think, too, that readers of the recently reported statements of hotel operators could be excused if they assumed that, today, hotel accommodation did not pay at all, that there is no return on the capital invested in the hotel business, and that no improvements are being made in hotel buildings and amenities. Assumptions of this nature would not. however, be correct. “Many instances are now available to .phow that either through enterprise or through requisitions of the Licensing Control Commission, hotel proprietdrs have in the recent past rebuilt, added to, or otherwise improved their premises,” said Mr Watts. “Moreover, the Price Tribunal is in possession of facts which show that returhs on capital invested in many high-class residential hotels—and many hotels of other grades—are as favourable as returns on investment in other forms of business. Offer to Proprietors ‘ ‘For three years at least, it has been known to the New Zealand Licensed Victuallers’ Industrial Association of Employers that if existing tariff rates are not sufficient to reward capital invested in erecting or providing modern facilities, the Price Tribunal would meet the position. I am advised by the tribunal that certain proprietors have taken advantage of this offer. Apart from these cases, there is no record of an investment proposal being submitted to the tribunal in response to its offer to the Licensed Victuallers’ Industrial Association of Employers. “I should point out, too, that under the Price Order governing hotel tariffs, provision is made for allowing special rates to reward any additional services that proprietors are prepared to offer. It would be interesting to know whether hotel patrons or the proprietors can give instances of any additional services which have been provided over the last few years to gain patronage, or which would be provided if control were removed.

“I am well aware that hotel proprietors are limited by factors other than price control in providing premises and services, but my point js that statements should not be taken at face value which suggest that if price control is lifted we will immediately see acceleration in. the construction of new hotels or in improvements of existing ones to attract tourist business. If hotel proprietors desire to attract such business, the opportunity to do so exists now. “No doubt the Price Tribunal will hear something at its hearings next week about the removal of price control from hotel tariffs. It will be interesting to see whether the tribunal is informed just what is necessary to be done if the control cannot be removed to make new or existing highclass hotel accommodation pay its way —at least as well as any competitive business in this country,” the Minister concluded.