Rotorua moteliers fear penalties for refusing unwanted emergency housing guests

Saturday, 8 May 2021

There are now more than 4,000 children growing up in motels across New Zealand, devastating parents who are desperate to find a permanent place for their kids to live.

Rotorua moteliers say they’ve been caught amid the housing crisis, and complain that they’re unable to turn away emergency housing clients when reservations are made via third-party websites. They say the crisis is hurting the tourism hub’s reputation, as Benn Bathgate reports.

It’s a pattern repeating itself across Rotorua.

A motel receives an online reservation through a website like Expedia, and when the guest arrives they disclose that they’re a client of the Ministry of Social Development (MSD).

They tell the motel’s receptionist to call their case manager to arrange direct payment from the ministry.

* City's motel industry survives on providing emergency accommodation

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* Coronavirus: Desperate moteliers house the homeless to avoid losing their businesses

* Emergency housing stocktake uncovers complaints about gangs, sex workers and dirty rooms

A number of moteliers told Stuff they were penalised if they relocated an MSD guest who had booked online.

Many of the motels have made clear they do not want to host emergency housing clients, but feel they have no option to turn them away when they arrive via a third-party booking website.

If the motels do refuse the reservations on arrival, they face financial penalties from online booking giants such as Expedia.

One operator said it was initially offered $2000 a week to accept MSD clients; an offer that was declined.

A Rotorua family, booked through an online service, later arrived with “three car loads of furniture; everything but the kitchen sink,” the motelier said.

A number of motel owners and managers confirmed the practice but declined to be named, citing the huge power wielded by the booking sites to send customers their way.

Asked whether MSD was using booking websites to place people in motels, regional director Kim Going said in an email “it is not our standard practice to use booking systems like Expedia to book emergency accommodation”.

The scene that greeted the staff at one Rotorua motel used as emergency accommodation.

A former MSD caseworker, who requested anonymity as a condition of discussing the ministry’s internal workings, said most emergency housing clients were instructed to find their own temporary accommodation.

They said it was commonplace for MSD clients to locate a suitable motel vacancy themselves, after which, if approved by the ministry, payment would be made directly to the motel.

The former caseworker acknowledged such reservations could be made via sites such as Expedia, although they said it was highly unlikely that MSD itself was recommending such a practice to its clients.

Some of the drug paraphernalia found in a Rotorua motel room after an MSD guest vacated the property.

“We tried as much as possible to maintain good relationships with motels, and wouldn’t place clients with venues that had advised they did not want to do business with MSD,” they said.

Asked whether MSD had been instructing people to use online booking websites, Going said: “we are not aware of any suggestions made to clients around using online booking tools”.

The former caseworker said a more plausible scenario was that word had travelled fast among those seeking emergency housing that motel bookings were more likely to be successful when made via a third party website.

They said it was common for such tips to be shared on social media pages.

Mike Gallagher, chair of the Rotorua Association of Motels, had to draw up a list of motels that don’t house MSD guests.

A number of moteliers told Stuff they were penalised if they relocated an MSD guest who booked via such sites.

“The site still takes the commission, and we have to pay the difference if [they are] relocated to a more expensive place,” one said.

While emergency housing cases provided steady income through the Covid-induced tourism drought, moteliers said there were social issues that came with having large numbers of MSD clients housed in one area.

They said motels were being hit by increased noise, alcohol and drug abuse, and a gang presence, just as the trans-Tasman bubble opened.

Rotorua MP Todd McClay believes as many as 45 motels in the city are being used for emergency accommodation.

Mike Raynes, the owner of the Palm Court Motel, was one of the few moteliers Stuff spoke to who agreed to be named.

He said other potential guests were being put off.

“One of the first questions people ask is ‘do you take MSD clients’,” Raynes said.

“If those places continue housing MSD [clients] and homeless [people], tourists are going to look further afield.”

Reg Hennessy, president of the Bay of Plenty branch of the Hospitality Association, said Rotorua was “absolutely hurting” due to the motel emergency accommodation situation.

It’s a question Mike Gallagher, the chair of the Rotorua Association of Motels, has heard so often he created an online list of Rotorua motels that do not take MSD clients.

“It was important to create that list,” he said.

“We needed to create a list of accommodation providers that are 100 per cent non-MSD.”

Rotorua mayor Steve Chadwick said she believed more than enough capacity existed for Rotorua to accommodate both tourists and MSD guests.

Stuff asked the ministry how many Rotorua motels it used, and for a breakdown of the number of people living in emergency accommodation nationwide in each region.

A spokesperson said the request would be considered under the Official Information Act, giving the ministry 20 working days to respond.

While MSD did not provide figures, National MP Todd McClay, who represents the electorate, said he believed as many as 45 motels were being used for emergency housing in Rotorua.

Labour List MP and Rotorua resident Tamati Coffey said positivity, not accommodation space, was what was lacking in Rotorua.

“That’s a lot of people.”

McClay said negative stories around MSD guests were beginning to have a knock-on effect.

“The reason so many people are speaking out now is the fear it will affect Rotorua’s reputation [as a visitor destination].”

The president of the Bay of Plenty branch of the Hospitality Association, Reg Hennessy, said Rotorua was “absolutely hurting” because of the motel situation.

He said staff at his Hennessy's Irish Bar had to deal with abusive individuals, and a rep who called recently told him he checked out of his Rotorua motel after finding it full of Mongrel Mob gang members.

“It’s suffocating Rotorua, sucking the life out of us.”

Court charge sheets backed up what police earlier described as a “perception” of rising crime in the area.

Alleged offences that could be tracked back to motel addresses included assault with a tyre iron, theft, driving while disqualified, resisting arrest and possession of forged banknotes.

Rotorua Mayor Steve Chadwick said the “potential” for reputational damage was concerning and that Rotorua Economic Development, the council-controlled organisation responsible for promoting the city, was “working to address perception issues through marketing campaigns that are underway both in New Zealand and Australia”.

She also denied tourists were being squeezed out of the accommodation market, citing the lack of non-Australian overseas visitors.

“There is still capacity, and it’s still very early days for the trans-Tasman bubble.”

Her comments were echoed by Rotorua resident and Labour list MP Tamati Coffey.

Coffey said he believed Rotorua had the capacity to welcome tourists “while showing that same manaakitanga to families and children in need of a warm, secure dry home during a global pandemic”.

“If Australians choose not to come here, it will be because of incorrect information that some of our community leaders are promoting, and just plain negativity.”

No-one Stuff spoke to criticised the initial use of motels to house homeless people and families, and acknowledged that without the practice the motels might not have survived the Covid lockdown.

“If there was no MSD in Rotorua most of the motels would have gone broke,” said Gallagher.

“It just needs to be done better now.”

By the numbers

While MSD would not provide figures on how many motels were being used in Rotorua, some large-scale regional information was available in the Ministry of Housing & Urban Development’s December 2020 quarterly report.

The report revealed $82.5 million was spent in the December quarter on special needs grants for emergency housing – typically for motel stays – from a total housing support spend of $957.5 million.

The data also revealed the number of grants rose steadily from the December 2018 quarter until June 2020 when it hit 9614, up from the previous quarter’s 6341.

The latest figure for the number of grants, for the December 2020 quarter, was 8503.

While a detailed, sub-regional breakdown of the amount of people in emergency accommodation across the country was unavailable, wider regional data does exist.

Unsurprisingly, Auckland led the pack for approved special needs grants Emergency Housing Special Needs Grants at the end of the December 2020 quarter with 14,935 at a cost of $31,259,604.

The Bay of Plenty was second with 5129 ($9,151,515) followed by Waikato (4386, $12,190,662).