The Glacier Country Hotel at Fox Glacier has been averaging just one room a night over summer; it has now been mothballed until September. Photo: Scenic Group

Hotels warn their guests have gone, they are losing their skilled workers, and some are on the brink of shutting down indefinitely.

But the Government has rejected their plea to be allowed to hire foreign workers stranded in New Zealand without work, insisting jobs like cooks, waiters and housekeepers can be filled by out-of-work Kiwis.

The new Hotel Council Aotearoa, representing about half the country’s 330-plus hotels, says many have barely survived summer. January should have been their busiest month with occupancies around 90 percent, said strategic director James Doolan. Instead, with a few days of January remaining, most had only 40 to 60 percent of their rooms occupied, and had been forced to slash about 20 percent from their room tariffs to fill even those.


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That meant their overall room revenues were down about 50 percent, but they still had to pay property-related costs like rents, rates, insurance, electricity and servicing debt.

Some are struggling to find the guest revenues and staff to stay open: the Glacier Country Hotel at Fox Glacier has been averaging just one room a night; it has now been mothballed until September. Its sister hotel, the five-star Te Waonui o Tane Forest Retreat at Franz Josef Glacier, is at about 10 percent occupancy – no more than 10 to 15 rooms a night. 

The same company has closed down its Scenic Hotel in central Dunedin until further notice. And in the North Island, it has shuttered its Scenic Hotel Te Pania, after floods in Napier, and it won’t reopen until March at earliest.

Scenic Hotel in central Dunedin has been shut down until further notice.  Photo: Scenic Group
Scenic Hotel in central Dunedin has been shut down until further notice.  Photo: Scenic Group

A Hotel Council report, provided to Government ministers and now to Newsroom, finds the jobs of many of the 20,000 people that were employed in New Zealand’s hotels are now at risk. “Hotels employ a lot more people than New Zealand’s other accommodation types on a like-for-like basis,” it says.

The report warns of a return to the days when taxpayers had to pick up the tab and the risk. “If private investors refused to develop and own hotels, Government would ultimately be forced to step in and do so itself, as was the case with New Zealand’s Tourism Hotel Corporation, and remains the case in emerging economies looking to establish an international tourism segment.”

The glacier hotels are two of the five properties in South Westland owned by the Scenic Circle group. The 17-property group had been declined assistance from the Government’s Strategic Tourism Assets Protection Programme, the company’s chief executive Brendan Taylor told Greymouth Star this week, and was now considering which of its businesses to hibernate over winter.

“Imagine you were a hotel industry worker and you wanted to build a career in hotels, and instead you’re working in an MIQ facility – being tested all the time for a highly infectious disease and looking after people who probably don’t want to be there. You’re hearing nothing about support from government for your chosen profession. Against that background, many good people are calling time on the hotel industry.”
– James Doolan

Even if a trans-Tasman bubble opened, West Coast operators couldn’t now expect decent numbers before the end of the year, he said. “That’s a long way away. I can imagine how much locals are hurting.”

Westland Mayor Bruce Smith said as many as 50 percent of business owners at the two glacier villages would struggle to survive the winter. And across the Haast Pass in Queenstown, mayor Jim Boult says what was once a tourist mecca has been a virtual ghost town since the New Year’s revellers left. “International visitors spend around four times the rate than what Kiwis do so we are suffering a big loss at the present time,” he told 1 News.

“Unless we see an Aussie bubble, I think an introduction of the wage subsidy is probably the best solution.”

Prime Minister Jacinda Ardern said that, beyond Australia and the Pacific, New Zealand’s borders were expected to remain closed for much of the year. There were two big challenges before they could open, and both would take some time.

“We either need the confidence that being vaccinated means you don’t pass Covid-19 on to others – and we don’t know that yet – or we need enough of our population to be vaccinated and protected that people can safely re-enter New Zealand.”

“There is significant additional supply coming online soon, all of which was commissioned in anticipation of normal operating conditions, not a global pandemic. New supply will decrease average room rates and occupancy across the board.”
– Hotel Council Aotearoa report

The only hotels with decent occupancy are those 31 that have agreed to serve as Managed Isolation and Quarantine facilities – and they have their own problems. An example is the Pullman Hotel in Auckland, where a Northland woman is believed to have caught Covid-19 this month. The hotel faced critical headlines this week about its management and sub-par ventilation.

“MIQ services carry a degree of brand and reputational risk in the event of security or hygiene failures,” the Hotel Council report says. “Quarantining guests continue to post negative reviews on public websites, when MIQ services are substantially Government-managed. Even after borders reopen and the quarantine regime is dismantled, it is likely to take some time before regular guests return to hotels that were once operated as MIQ facilities.”

The MIQ hotels face lasting damage to their brands, extensive deep-cleaning and refurbishment costs as the last isolation guests leave, and losing their best staff.

“Imagine you were a hotel industry worker and you wanted to build a career in hotels, and instead you’re working in an MIQ facility – being tested all the time for a highly infectious disease and looking after people who probably don’t want to be there,” James Doolan said.

“You’re hearing nothing about support from government for your chosen profession. Against that background, many good people are calling time on the hotel industry.

“People who wanted to build careers in hosting international travellers taking the holiday of their lifetime are instead working in a very different job, and because of that they’ve decided to look for more secure work at non-MIQ properties or in totally different industries. The workers at our MIQ facilities are making very real personal sacrifices in New Zealand’s fight against COVID.”

Just before Christmas, the Government agreed to employers’ pleas to extend work visas by six months, but that is a short-term fix that hotels say won’t see them through winter, and won’t let them employ jobless overseas workers from other hotels, other locations and other industries, like restaurant workers. 

Immigration Minister Kris Faafoi has written back to the Hotel Council, saying the Government is sticking to its guns. “With the Covid-19 pandemic affecting many workplaces, the Labour Market Test is now even more important to help ensure that jobs are available for New Zealanders who need them,” he wrote. “Relaxing conditions on hotel-related work visas would not align with the intent of the immigration system.”

Indeed, he retorted, it was likely immigration authorities would issue even fewer Essential Skills work visas in the foreseeably future.

In a perverse twist, five years ago the previous government pushed for investment in more hotels – and a number of those are now opening. Sudima and Naumi chains have opened numbers of new hotels, there is a big new Park Hyatt in Auckland, and just last week Hotel Grand Chancellor announced a new 12-storey property, also in downtown Auckland.

“There is significant additional supply coming online soon, all of which was commissioned in anticipation of normal operating conditions, not a global pandemic,” the Hotel Council report says.

“New supply will decrease average room rates and occupancy across the board. When borders do re-open, hotels formerly operating as MIQ facilities will also re-enter the market, which will once again push down rates and occupancy.”

Newsroom Pro managing editor Jonathan Milne covers business, politics and the economy.

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