THE PRESS WEDNESDAY, JULY 21, 1976. Hotel Corporation’s role

Press, 21 July 1976, Page 16

THE PRESS WEDNESDAY, JULY 21, 1976. Hotel Corporation’s role

In 1974 the Labour Government passed a new Tourist Hotel Corporation Act, which ga\e the Minister of Tourism power to scrutinise and direct the activities of the corporation to ensure that the corporation discharged properly the new responsibilities which the Government wished it to assume. The mam aim of the Tourist Hotel Corporation Amendment Bill which the National Government has introduced into Parliament is to free the corporation from having to heed day-to-day directives from the Minister. The Government apparently expects that the corporation, left to itself, will not engage in the activities the Labour Government wanted it to undertake.

The last Government was eager to require the corporation to begin providing low-tariff accommodation for New Zealand families in resort areas and to begin competing with private enterprise in some places which have profitable markets for holiday accommodation. The aim of encouraging the corporation to expand its operations outside the resort areas was to reduce the annual loss of the corporation which had been, in some years, substantial. Historically, the role of the corporation had been, before 1973, to provide hotels, primarily for overseas tourists, where private enterprise could not take the risks. These risks were high where the hotels were remote and the demand seasonal. In these circumstances, an annual loss was almost inevitable. The National Government clearly wants the corporation to revert to its traditional, more limited role and the corporation s financial performance will probably suffer. A small annual loss is acceptable because of the general economic benefit, to tlNe tourist industry’ and therefore the country as a whole, of the corporation’s activities. Co-operation with private companies providing accommodation outside remote resort areas

may enable the corporation to continue to attract a good share of lucrative tour patronage and so achieve a better record than it managed in some previous years. But the Government must be prepared to justify the corporation’s again operating in the red if it is to deny the corporation the opportunity of establishing a chain of hotels of its own throughout the country. If the corporation relies on some profitable hotels to make good its losses elsewhere, it may be doing so at the expense of having private enterprise provide hotels where they are most needed. But at least the competition in these places will be fair competition. Certainly one of the brighter footnotes to the debate is provided by the corporation’s report of a profit last year, and of improvements in business this year. This must moderate the argument in favour of launching into what seem more profitable new waters—waters w’hich might become unprofitable for all. The Government should not pretend that its predecessor’s goal of providing low-tariff accommodation for New Zealand families in resort areas was not worthy. The Government is wrong to assume that private enterprise can be counted on to meet the need for such modest accommodation in all places. But the Tourist Hotel Corporation was not the appropriate body to use to fill this gap in the country’s holiday accommodation. The idea that the corporation might be subsidising low-cost accommodation is no more attractive than the idea that the taxpayer should pay for losses on expensive tourist hotels. But the merits of low-cost holidays cannot be dismissed and if an organisation, or organisations, can be found to provide a paying service, the Government should not stand in the way. The corporation, however, does not seem to be the appropriate organisation for this job. National Park Boards might be good candidates for it in some areas.