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The Effect of COVID19 on Businesses – Famed Resorts to Close

The tourism and hospitality industry are the ones expected to be greatly affected by COVID19 and so too the entertainment industry.  With more stringent measures being placed on the businesses in these categories, job losses

The tourism and hospitality industry are the ones expected to be greatly affected by COVID19 and so too the entertainment industry.  With more stringent measures being placed on the businesses in these categories, job losses are imminent.  Australia is already feeling the effect of it with businesses letting go of staff.  There isn’t much choice for them.  But even countries with no re-recorded cases, the effect isn’t just job losses but shutting down of businesses.  The Cook Islands is one such example with a renown and popular resort letting go of close to 200 staff.

 

The Cook Island News reports:

 

More than 200 jobs set to go as The Rarotongan, Sanctuary Rarotonga and Aitutaki Lagoon Private Resort shut down, the first big victims of the coronavirus.

 

Twenty-six years ago, Rarotongan managing director Tata Crocombe bought the Rarotongan and closed it down straight away.

 

The rundown hotel was in desperate need of a spruce-up and once it was reopened it morphed into one of the most successful resorts on Rarotonga hosting tens of thousands of guests from around the world annually.

 

Never in his worst nightmares did Crocombe think that this week, he would stand up in front of 200 staff members – “my family” – and tell them that they were closing for business, again.

 

The Covid-19 outbreak sweeping the globe has hit the tourism industry and the economy like no other disaster before.

 

Yesterday Crocombe announced to staff that all three of his resorts, The Rarotongan, Sanctuary Rarotonga, and the Aitutaki Lagoon Private Island Resort would be shut down from next week until further notice.

 

He anticipates at least a two to six month shutdown.

 

“I told our staff the facts, they are intelligent people, that in a week’s time we will have no guests, zero occupancy means no income. Rarotonga and Aitutaki are closed for business,” he said.

 

Aitutaki closes to guests today; staff will spend until Monday closing the hotel down.

 

The two Rarotonga resorts will close at the end of next week, or sooner, after the last of their 100 guests leave.

 

This time a year ago, there would have been 250 guests at The Rarotongan, 75 at Sanctuary Rarotonga, and 60 on Aitutaki. “Now, the business is winding down. In a few days we will have no guests.”

 

“This is heart-breaking, we have staff here that have worked for this business for 20 years and more, three or four generations of families, who have given their hearts and souls to this place. This is more than just a place of work – we are a family.

 

“We can’t pay them through revenue. We have no revenue.”

 

“What can you say? It’s completely unexpected. I feel terrible for the staff. We’ve got contingency plans for floods and fires and hurricanes even computer failure, but nothing for something like this.”

 

The restaurants, too, will close. “We understand government will close restaurants and bars

 

anyway like governments elsewhere in the world.”

 

“I shut the Rarotongan for three months when I first bought it in 1996, because it was badly run down. And I swore I’d never do it again. It was so difficult to get it started again.

 

“But you’ve got no guests, you’ve got no business.”

 

Among his staff are workers from the Philippines, Fiji, India and further afield. They don’t even have the option of leaving the country and going home to their families now, he says.

 

He and his team are looking to the banks and Cook Islands Government, to see what sort of financial assistance the company and its staff will be eligible for.

 

Staff have been told there will be no jobs, bar a few part-time security, reservations, accounting and maintenance positions – but nobody has formally been given notice of redundancy yet as the company tries to find a solution to keep as many staff employed as possible.

 

Even when it shuts down, there is a lot of refurbishment, training and other work that can be undertaken to prepare for the eventual recovery.

 

Most staff will only know if they will be able to keep their jobs after the government has announced the details of its support package, scheduled for March 30.

 

Yesterday staff were relieved, to a degree, because he was straight-up and told them the truth about the business. They understood he had to make a decision.

 

“We told them, the reality is, we’ll have no guests shortly, so they’ll have little or no work.

 

“There is no point sugar coating it. No-one saw this coming. If you had asked me last week what might happen I wouldn’t have predicted that I would be making decisions like this, the reality is these decisions need to be made quickly for everyone’s sake, so people can plan their lives.”

 

Crocombe pulls no punches when it comes to the impact he believes the Covid-19 crisis is going to have on the Cook Islands.

 

“I’m going to be honest, I don’t think we have hit the bottom yet.

 

“We have never, and probably will never again, see anything of this scale in our lifetimes. It’s the single biggest financial crisis to hit the world in 100 years. The impact is going to last long after the virus disappears.”

 

Even mothballing the hotels for three months would mean 12 or more months to rebuild the market; a longer shutdown will have even more severe implications. The road to recovery for the Cook Islands will be long and hard, but this will pass, Crocombe said.

 

“Times of great distress are also times of great innovation. Technology, particularly artificial intelligence, now more than ever will play a critical role in what our future looks like,” he said.

 

“There has been no loss of life here, there are people around the world suffering massively, you only need to look at places like Syria and think we are better off than we might think.”

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