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Rotorua hotel hit hard by the smoking ban.


Rotorua hotel hit hard by the smoking ban.

While Steve Chadwick, Rotorua MP and sponsor of the Smokefree Environments Amendment Act, lives in relative comfort on her parliamentary salary, just down the road at the Lake House Hotel, things are a little different.

With a twenty-year house renovation background, Ian Frith and Teresa Scally purchased the historic Lake House Hotel more than five years ago. Their plan was to restore the somewhat rundown building, and at the same time, develop a successful hotel and backpacker accommodation business.

Ian and Teresa slowly turned their Lake House Hotel plan into reality. Restoration work progressed to schedule, the bar became a hit with locals and the backpacker accommodation proved to be popular all year round with overseas and local tourists.

Things changed for Ian and Teresa however, with the introduction of the smoking ban in bars in December 2004. Bar regulars disappeared; dropping profits for the first six months of the ban by $80 000 in contrast to the corresponding period the year before.

This drop in profitability has had a flow-on effect. Restoration work has slowed, backpacker accommodation rates have been heavily discounted to maintain a cash flow, and Ian and Teresa are no longer able to afford to pay wages. Teresa has taken on most of the hotel’s day-to-day workload and Ian as had to find other work.

Teresa Scally says, “This was never a whim investment for us. We came into this business with our eyes open and knowing we’d be in for the long haul. We knew we’d be committed to considerable financial and time investment, but we had a solid business plan and the enthusiasm to see it through to completion”.

“There were plenty of variables we had to take into account when formulating the long term plan. We allowed for a possible downturn in economic growth, fluctuating exchange and interest rates, building material price increases, demographic changes and a host of others. In hindsight, what we needed back then was a magical crystal ball, so we could’ve foreseen the coming of the smoking ban, and the effect it would have”.

“The politicians who pushed for the ban assured us all that we’d see a lot more non-smokers once the ban was in place and bars were smoke-free. This might have happened for other bars, but certainly not here at the Lake House”.

“This is where we again need the magical crystal ball so we can see if things are going to pick up for us. I cannot honestly say how long we can sustain losses at the rate we’ve suffered to date, or the physical strain and psychological stress, the ban’s inflicted upon us”.

“I know we’re only one business and maybe this government calculated that a sacrifice of x number of businesses was the price they were prepared to pay when forcing the ban into law, but they never asked us if we wanted to be part of their sacrificial offering”.

Ian Frith and Teresa Scally’s story confirms the smoking ban in bars has struck hard upon some hotel owners and licensees, and is placing businesses in jeopardy.

ENDS

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