RISE IN TARIFF WANTED

Chronicle (Levin), 9 April 1949, Page 6

RISE IN TARIFF WANTED

1 Hotels Ask For Increase OI 50 Per Cent. "We ask that you give such an increase in kotel tariffs over the whole in dustry that not only will it wipe out existing iosses but will also give a reasonable, althouglr modcst retu-m on capital invested on the 'house side of the industry, ' ' said Mr G. G. Watson, today wlien making stibmissions for the New Zealand United Licensed Victualiers Association, in support of its aplication to tlie Price Tribunal for inereased tariffs at licensed hotels'. Mr Watson said the tariffs to eliminate losses and to give a small proiit of 4 per cent. on net capital and S per eenr. on gross capital, would need to be mcreased by just on 50 per cent. • That might seem a steep increase, i • said Mr Watson, but figures showed that that increase was necessary. CaJl- . ing to mind the increased costs of running homes in the last few years, could anyone then be surprised at a suggeslion that a 50 per cent. increase froin 19119 was necessary in 1949 to allow hotels to break even? The request was in line with the in- 1 dustry 's experience and with wliat had been granted by a coininission in Great , Britain. Mr Watson said the Price Tribunal had departmentalised the. liquor side of the hotel business and should also departnientalise the residential side so that it could stand on its own feet apart , from the liquor_ side. The. principal costs on the residential ' side had gone up by S0 per cent. since 1909, while tariffs had femained the : . r ■ i same, said M r Watson. That had resuJt- . . » i ed in the mdustry i-arrying enormous losses on the house side of the business in recent years. System of Grading It was ol)vious that a system of grading of hotels was necessary as tariffs varicd between wide limits, said Mr : Watson. The Licensed Victuallers' As- I sociation reeomnicnded the Automobile 1 Association grading as it would appear i 011 its new basis in the hand-book about I to be issued. In regard to hotels not, i graded by the Automobile Association, | lie suggested- that the price control division and the Licensed Victuallers'; Association in eon jmiction could determine gradings. There should be the. . right of appeal if regradmg was ! thought justilied and if the divisioti thought any hotel had let its service I deteriorate it should liave the right to ' reduce the grading. Mr. .Tustice Hunter (president of \ the Tribunal): I think it is adniitted th&t- since 1959, the standard of service; ■ in -hotels 1ias .dhelincd. l)o you submit that. the incfehl^s requested will put ■; back the 'staiidaru of service ? ' If hotels were put 011 a basis of making a proiit on the house side, or to i break. even, it could . be a§sured that . .hotels would„put. on the best service as j a matter. of competi'tion, said Mr. Wat- J son. Untimately, he "continued, tlie 1 stan^ards. . o£': hotel accommodation t ■ 'worilfc be ;in the luinds of the Licensiug 1 Control Goiiimission. ; .The sehedule referred to showed daily I rates varying, through various grades, from 39S'down to 20s, while for bed and breakfast- the .hhargcs suggested varied from 23s dowli to 12s (kl. Additional costs suggested were 5s a guest for an individual bathroom and 2s (id for a separate shower room without bathroom, a recoverv charge of 2s (3d for laundry costs and services when a guest stayed only the night, ls ud for meals served in rooms and a.minimum of ls (kl for light niorning, afternoon, and night teas. Increased Costs Discussing increased costs, Mr. Wat * son said the percentage increase of Ihe cash wage varied from (50 per cent. to 99 per cent. and the overall increase in wages from 1939 to 1949 was about 85 per cent. Agricultural and vege table products had increased by 80 per cent., while meat products had gone

up 54 per cent.' Carpets, ligen, crockery, silverware, and cutlery were all up at least 100 per cent., and in some cases were as high as 200 per cent. compared with 1939, said Mr. Watson. Generally furnishings were up 1*60 per cent., and laundry 82 per cent. in cost. He submitted that proof had been given that the costs of running the residential side of the industry had increased very substantially, the total increase probably being in the vicinity of 80 per cent. " It is well known from statements of visitors to New Zealand and also from evidenee of New'Zealanders who have travelled overseas that the tariffs of hotels in tliis eountry are as low as anywhere in the world,' ' said Mr. Watson. The total house losses from 41 hotels, which were a fair cross-section of the various grades, amounted to £180,779 for the year '1947-48, said Mr. Watson. The forecast for thoge house losses in 1949, exclusive of the effect of the new award, was £222,801, and with the new hward £299, S78. Using these figures of approximately £300,000, against the total house receipts of £660,000, the industry required an average increase in tariffs of 45 per cent. to break ' even on the residential section, said Mr. Watson. Alloiving for a moderate -return of S per cent. on book capital emploved, an overall increase of 49 per cent. on the old tariffs was required. "We submit on the above basis that the tariffs requested are more than justilied to place the residential section of the hotel industry 011 an ecomonie basis," concluded Mr. Watson. Proposed Tariffs. The trade proposed a scale of tariffs as folloWs: — Half sta'r 2'0s, one star 23s ;6d, 2 star 26s Od, 3 star 30s, 3 star plus .31s, 4 star 32s Od, 4 star plus 33s 6d, 5 star 36s 6d, 5 star plns 37s Od, X grade 39s. Extra charges proposed included 30s a day for suites, 5s a day for individual bathrooms, 2s 6d a day for fjeparate shower rooms, ls Od extra for meals served in rooms, 2s Od a day extra for guests staying one night only A summary of cost increases since 1939 was as i'ollows: Wages 85 per eint, agricultural foods 80 per cent, meat foods 54 per cent, furnishings 100 per cent, laundry 82 per cent. Mr. II. M. Wise, director of price control, said he did not agree that the trade needed increases to the extent proposed. The Price Control Division believed the solution lav in the relationsliip of bar to house trading. He recommendod daily tariffs as follows: — X grade ( 1 uxu ry) ,32s Od, 5 star 30s, 4 star 205s. *(kl, 3 .-star- 23s{ 2 star 20s, 1 star 18s, ungraded 10s. Extras would be -iallowed as* follows: — Private bath 5s eacli, 'private .sho\ver 2s Od each, suites ,3Ui? eacll a day, meals in bedrodias ■ ljS ".extra, niorning teas ls Od for •i star hotels and better and .1 s for others. Children's -rates were proposed as follows: — Under two years no Charge, 2 t'o 5 yea'fs quarter tariff, over 5 and under 10 half tariff, over 10 full tariff. sif, q The Trfibunal adjourned until Tuesday when the trade will reply to Mr. Wise's submission^.. . ! .