300 HOTELS NEAR BANKRUPTCY

Press, Volume XCVIII, Issue 28895, 15 May 1959, Page 12

300 HOTELS NEAR BANKRUPTCY

Breweries’ Official Tells Of Losses

“The Press" Special Service ROTORUA, May 14. About 300 hotels in New Zealand are at present facing bankruptcy, said Lloyd Wilfred Woods, secretary of New Zealand Breweries, Ltd. when giving evidence at a sitting of the Licensing Control Commission in Rotorua yesterday. The commission comprises Mr A.E. Goulding, S.M. (chairman), Sir William Gentry and Mr F. Kelly. In the past, said Mr Woods, hotels operated on the general assumption that the sale of liquor would cover losses on accommodation, but now hotels were supplying beer at a loss, too. Before the commission was an application by Kawerau Hotels, Ltd., to close the accommodation and meal services at the Kawerau Hotel until November 30, when the licence would come under review. It was submitted that bar trade should continue meanwhile. Written legal submissions are to be made by both Mr Woods and Mr L. H. Southwick, counsel for the applicants. In adjourning the hearing, the chairman said: “We propose to give careful consideration to this application. It is one of great public importance.”

The grounds for the application, said Mr Southwick, were losses on the operation of the hotel since full operation was commenced in April, 1956. To March, 1959, these losses amounted to almost £22,000. The total cost of the hotel, including furniture, land and goodwill, was £ 130,000. “If the hotel is to continue to operate, it is entitled to seek some means to operate as an economic unit,” said Mr Southwick. “This is by no means the only hotel facing this difficulty.”

The licensee of the hotel. Lionel John Crump, produced accommodation summaries showing that, with 18 guest beds available, average nightly accommodation last year had dropped to four and threequarter persons, compared with seven a night in 1957. The total number of guests had declined from 2599 in 1957 to 1730 last year. Since that time the accommodation position had grown even worse, said Mr Crump. The bar trade was the major part of his business. Mr Woods was granted permission to produce the accounts of the company. He said the major shareholder, with 33,500 shares out of a total of 65,000, was New Zealand Breweries, Ltd., while Hancock and Company, Ltd., held 5000 shares, and private shareholders held the remainder in varying amounts. Controls on Beer In ■ the first six months of operation a profit of £1428 was made, said Mr Woods. The next full year showed a net loss of £7311, although the bar profit was £12,823. This was followed in 1958 by a net loss of £14,650. “On these figures,” said Mr Woods, “the hotel, in the opinion of the owners, just cannot continue. It would have been closed long ago if it had not been guaranteed by the big companies.” Mr Woods stated that the recent controls imposed on beer quantities and price had forced licensees to make losses on every glass of beer sold, varying from one-eighth of a penny a glass to one half-penny. “This is brought about,” he added, “by the increased tax and by a price order which is virtually impossible to operate. I would defy anyone to demonstrate how to comply with the order without loss.” “Suppose accommodation was left for 10 persons instead of 18. Would that be a worthwhile relief?” asked the chairman. Mr Woods: We would rather see it come down to six on bed and breakfast alone. Only Accommodation John William Hayes, police sergeant at Kawerau, said there was no other accommodation available in Kawerau for the public. He considered the standard of the hotel had slipped since it had been decontrolled. There had been dissatisfaction m the town over the hotel’s wholesale liquor service and he knew people who went to Te Teko or Edgecumbe because they were getting better treatment there. The Town Commissioner, Francis Prideaux, said it would be a great hardship to the town as a whole if the accommodation was closed. It seemed that the policy of the hotel was driving business away, and the soaring prices, with worse service, had the effect of sending people to other hotels.