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JobKeeper 2.0
Summary of Impact on Blue Mountains Tourism Businesses
Prepared by: Anthea Hammon, Managing Director, Scenic World on behalf of the Blue Mountains
Tourism industry
Date: 17/9/2020
Executive Summary
This document provides case studies from four businesses in the Blue Mountains all severely
impacted by the bushfires and now COVID. This document details the impacts of JobKeeper 2.0 and
potential solutions to assist these well-run businesses get through the next 6-12 months. Tourism is
the life blood of the Blue Mountains economy. The total value of Tourism -related output estimated
at more than $624million for the region (12.2% of the total output) and is the second biggest
employer in the region employing 15.7% of the population
1
.
The main points from the case studies are as follows:
- Good trading across July/August as Sydney reemerged from lockdown has not made up for
the November – February Bushfire impact followed by COVID closures (more than 6 months
of significantly reduced or no trade). These businesses are on a knifes edge, they have well
run businesses, but the combination of the bushfires and then COVID have depleted their
cash reserves and they are reliant on JobKeeper to help them survive the uncertainty of the
new few months. However, many are at risk of losing JobKeeper, so are turning away
business in September to ensure they can still get it through until December and March, or
they will risk losing their business altogether. This has a negative impact on the tourism
economy from both an experience and revenue perspective. Businesses in tourism in these
areas need to be able to get the September - December JobKeeper assistance, no matter
what their July/August trading was – and alternative test such as proof of impact due to the
bushfires could be used instead.
- Due to the bushfires last year, businesses in bushfire affected areas will struggle to pass the
30% below prior year revenue test. Although there is currently an ATO process to get an
exception and use alternate figures, this exemption or alternate test should be automatic for
anyone in a bushfire impacted postcode for the January to March quarter.
- For businesses reliant on international guests such as Explorer Bus and Scenic World, the
Sydney market, and even the rest of Australia when it returns, is in no way making up the
difference in visitation. JobKeeper and other forms of support beyond March will be needed
to help these companies survive.
1
Blue Mountains Economic Enterprise 2019 Tourism Industry Profile
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The Blue Mountains Tourism Industry
The Blue Mountains is a city located within the World Heritage Listed Blue Mountains National Park.
Tourism is the life blood of the community; the Blue Mountains National Park is the most visited in
Australia with over 5 million visits in the 2018/19 year. Tourism is the second biggest industry after
health services employing nearly 3000 people (15.7% of the population) and creating more than
$624 million output (12.2%). As with other tourism regions around Australian the Blue Mountains
has been impacted for nearly 12 months. A bushfire in Woodford on the 8 November 2019, followed
by a Catastrophic bushfire day on 12 November, was the start of the decline in visitation which saw
the entire summer trading period severely impacted. Visitation started to recover in late January
early February and hopes were high that the region would bounce back, only to have COVID impact
overseas visitation in the middle of February leading to the cancellation of pretty much all Chinese
New Year bookings, and then of course the complete shut down in March.
The people of the mountains are resilient and are doing their best to get their businesses through
this very difficult time. Providing a COVID safe way for visitors to experience the best we have to
offer is critical for our recovery, but this comes at a significant cost and at the moment JobKeeper is
helping to make businesses viable.
Latest Update
As of the 13
th
of September a positive case was identified in The Blue Mountains in Katoomba and
Wentworth Falls, followed by 3 more in the days since.
This is important to mention in this document to highlight the discussion about the knife’s edge that
businesses are on, and the necessity to continue to provide JobKeeper no matter their July/August
trading figures.
Although Scenic World isn’t a case study in this document, it should be noted that the day following
the announcement of the COVID case in the mountains, Scenic World had a 20% drop in its visitation
(with no other known factors impacting the day). Visitors are still very jittery, and these businesses
are at the mercy of that, so need support to ride out this next, very uncertain few months.
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Business Cases
Four business cases have been provided from a mix of different parts of the tourism industry in the
Blue Mountains; a day spa, a café, a hop on hop off sightseeing tour and a hotel. This gives a
snapshot of how different parts of the industry are being impacted.
Case Study 1
Linda Davis - Spa Sublime - Katoomba
“My name is Lynda Davis. I own Spa Sublime - a destination day spa in Katoomba. I have
successfully run this business since 2005, employing and training local women.
Throughout most of 2019 many retail/ tourism and accommodation businesses in The Blue
Mountains saw zero growth or a decline in revenue due to a drop in overnight visitors. Then in
September the bushfires hit the region.
The result to my business was catastrophic. We saw an immediate decrease in revenue. The
December quarter is the busiest period for my business and the turnover we normally experience
the 4 weeks before Christmas is equal to revenue for the whole September quarter. I use the
revenue we receive in December to grow the business for the next 6 months
Last year, this did not occur. Visitors and tourists stayed away, and our local clientele stayed at
home. 3 of my team members were personally impacted by the bushfires and had to evacuate their
homes. Our bookings were non-existent. With all the smoke in the air, it was hard to go outside. In
early December, I had to release several last minute gift voucher sales and promotions In order to
protect my cashflow. I believe that the only reason we were able to survive this period and continue
to trade through January and February was due to the cash reserves I was able to generate from
these Christmas sales, and my belief that things would return to normal once the fires were out.
Other businesses like cafes, retail shops and accommodation did not have the same opportunity to
generate income reserves in this way.
By the end of February, my cash reserves were depleted. Then in early March Covid began to impact
our bookings. By the middle of March, we had a few local Covid cases (Katoomba High School was
closed for a short period) and it was clear to me that we would not be able to continue to trade. On
the 19th March, to protect my team, I made the difficult decision to cease trading - one week before
the government announced that we had to close.
Having to stand down all my therapists was one of the most difficult things I have ever had to do
professionally. These women earn an award wage, 2 of them are single mothers, for them to be out
of a job was devastating. Then JobKeeper was announced. This saved my business and allowed me
to retain some of my team during the 11-week lockdown. We all used this time to upskill, retrain and
reinvent the business so that when we were allowed to reopen in early June we were able to hit the
ground running (even though I had a reduced number of employees as 2 did not qualify for
JobKeeper)
June trading was ok but down on previous years. But in the last 6 weeks the region has seen a
massive increase in visitation. We are now extremely busy - though we have had to reduce our
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capacity to be Covid-safe. In July we had a record month in bookings and the highest July turnover in
15 years. However, 6 weeks of prosperity does not make up for 12 months of struggle. It just means
that we are now able to pay down some debt.
Although business has been fantastic for the last few weeks, this is by no means the new norm.
Tourists could stop coming at a moment's notice. We only need one small outbreak locally and the
bookings will vanish. If the worst happens, like in Victoria where we are forced back into lockdown,
we will be one of the first businesses forced to close and I believe my business will not survive.
I understand that at some point the government has to wind back JobKeeper, but I now find myself
in a very difficult situation. I can confidently say that this quarter’s revenue will be equal to (but not
exceed) last year if we continue to see the same level of bookings. But this does not make up for
what we have experienced financially in the last 12 months.
I feel the heavy burden of providing job security for my small team of dedicated local women who
have worked extremely hard to ensure that the business survives. I need to be able to continue to
access JobKeeper for the next 6 months. We need this security. As a region, we need to get back on
our feet, The Blue Mountains economy relies on tourism. We have all suffered during this virus but
on the back of bushfires, floods and drought, our region has suffered more than most.”
Further, it will be next to impossible for us to qualify again in January based on a 30% reduction on
Dec quarter 2019. This would not be sustainable for me, there is no way my business would survive a
30% reduction on 2019
My biggest concern is if we go back into lockdown - if my team are on JobKeeper, then I can survive
and continue trading next year. If we lose JobKeeper in October, are forced to close again, and our
December quarter is lower than 2019 then I would have to close permanently.”
Further to Lynda’s case, when I spoke to her in the first week of September she informed me that to
make sure she could get Jobkeeper2.0 into the next quarter, she had cut off September bookings
and was turning to get below the 30% revenue, and that after reviewing her numbers this was the
best way for her to survive.
There are a few factors that play into this.
1. The shortening of the test period to 3 months rather than being able to take the average
across 6 months means that many businesses who opening in June for the July school
holidays and had good trading across July and August cannot meet the eligibility for
September to December. It helped Victoria but did not help us.
2. Just because businesses had a good July/August due to the rush of people getting out after
lockdown, this does not mean they have paid pack the debt or deferred payments that were
generated when they were closed for 3 or more months earlier in the year, and have been
operating on reduced revenue since November the prior year. JobKeeper is helping them
keep their heads above water and they cannot afford to lose it.
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Case Study 2
Michael Brischetto – Co-Owner - The Carrington Hotel Katoomba
See Following Letter
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Case Study 3
Robyn Parker, The Paragon, 16 Katoomba St, Katoomba NSW 2780
JobKeeper criteria. “This is going to catch many businesses in regions effected by last summer’s
bushfires. The criteria requiring a 30% reduction in turnover compared with the previous year is just
not going to be a fair or reasonable benchmark for businesses up here. We saw a massive downturn
from November onward. At this point in time the fires were burning on the North coast and there
were catastrophic fire warnings issued for pretty much the whole state. Consequently, trade up
here nosedived even before the fire’s hit us. People were scared and stopped coming to the
mountains, a well-known fire risk area. If we must prove a 30% reduction compared with the same
period last year which was already significantly down, we will not qualify for JobKeeper. This is not a
fair benchmark – we were already in financial free fall this time last year. The criteria for JobKeeper
eligibility needs to be amended to allow for businesses in this situation.
Finally, our situation going forward. This year, after seeing strong July trading, things are slowing
now at the top of the mountains. Weekends are holding up ok but without overseas and interstate
tourists there is little to no weekday trade. Many small businesses are starting to struggle.
Even with JobKeeper, I am not sure we will be making enough through the summer to justify keeping
going – and we are not the only ones. Businesses who have always traded 7 days per week are
cutting back, they are not even bothering to open Monday, Tuesday, Wednesday. We are very
concerned about the next few months.
Our local Landlords are feeling they have done their bit by giving us rent relief through the bushfire’s
and COVID and we are now back to full rents again. Unfortunately, nothing else is back to normal so
again business is being squeezed at both ends. On top of this when it is busy, we must turn
customers away to comply with Covid regulations.
It is disappointing, to see there has been no targeted help for tourist regions, or the hospitality
sector despite what was promised. We have been hit by multiple issues and yet the same help has
been given to all businesses - including the ones that are booming or unaffected. Now is the time
that the impact is going to really be felt for businesses like mine. Support is drying up but still our
local economy is wearing the burden of international and local border closures and daily restriction
on trade due to Covid. With each call the Premier makes for people to avoid public transport or to
stay at home as much as possible our trade dwindles. We have yet to see any targeted support of
our predicament.”
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Case Study 4
Jason Cronshaw – Owner - Fantastic Aussie Tours and Explorer Bus
See Attached Letter
Golden West Holdings ABN 54 003 025 250 E [email protected]
283 Main Street Katoomba NSW 2780 P 02 47821866 W www.explorerbus.com.au
17
th
September 2020
To Whom It May Concern
This letter is to outline the continued impact of Covid 19 restrictions on certain sectors of the tourism
industry and in particular, for the Blue Mountains Explorer Bus, which we operate.
Our business has been operating since 1974 so has certainly being through many ups and downs in
that period, although we have not faced anything like the current situation. As a company, we are
currently trading at 97% down on Explorer Bus sales for last year (April to July). Our market has
traditionally relied on international visitors (approx. 75%) with the remaining domestic (primarily
interstate) visitors.
While accommodation in the Blue Mountains is currently doing very well with the self-drive market
from Sydney, any business that traditionally relies on the International market – as we do - is still
struggling. It is proving very difficult to tap into the Sydney domestic market and encourage them out
of their cars and onto a bus, especially with the State government’s messaging of “don’t catch public
transport”.
In normal times we operate 7 days a week. Currently however, we are limited to just Saturdays and
Sundays (although we do plan to run daily during the NSW School holidays). We have also changed
our marketing to focus on Sydney residents and have seen slight signs of improvement, however our
sales are a world away from a weekend average of more than $20,000 pre-Covid 19. To demonstrate,
our actual sales over the past few weekends:
• 15
th
/ 16
th
August $1,419 22
nd
/ 23rd August $2,220 29
th
/ 30
th
August: $2,934
• 5
th
/ 6
th
September $1,851 12
th
/ 13
th
September $1,298
Considering we need 3 drivers and 2 shop staff each day to operate, unless Job Keeper is extended
and/or International borders re-open, we are likely to have no choice but to close down operations
next year and make our staff redundant. It is only because of JobKeeper, that we can operate at all at
the moment.
I am of course happy to share any more information and data if required to assist with any forward
modelling required to assist us all through this terrible situation.
With best regards,
Jaosn Cronshaw
Jason Cronshaw
Managing Director
