'Golden Mile' to 'MSD Mile': Rotorua's reputation takes a hit amid housing crisis
Thursday, 24 March 2022
At least 35 Rotorua motels are being used for emergency accommodation, and another 13 could soon be converted. Some fear it’s doing irreparable damage to the city’s reputation, and tourists won’t want to come back. Benn Bathgate reports.
Part of Andrew Wilson’s job as the chief executive of Rotorua Economic Development (RED) is to get visitors to the tourism hub, where, according to the organisation’s website, they will “create unforgettable memories”.
It’s a job, he says, that is being actively hampered by the Ministry of Social Development’s (MSD) use of at least 35 of the city’s motels to house homeless people.
A visitor who left an online review under the name ‘Alana’ certainly won’t forget her visit to the North Island’s premier visitor destination.
**READ MORE:
* Sorting Rotorua's homelessness problems will take 'longer than anybody thinks'
* After the border opens, what happens to families living in motels?
* Rotorua moteliers fear penalties for refusing unwanted emergency housing guests
* Emergency housing stocktake uncovers complaints about gangs, sex workers and dirty rooms
**
“The most uninhabitable, unsafe place I’ve ever stayed… The residents were not welcoming. After watching them wait for a ‘delivery’ they moved into the room next door and began smoking their drugs. In the middle of the night a huge fight broke out, there were things and people smashing into my room. I was scared. I left in the night and found other accommodation for my safety.
“Girls, or anyone, avoid this place for your safety.”
‘775traveller’ also seems to have left Rotorua with “unforgettable memories” of their stay, beginning their online review under the headline: “Scary”.
“The room had a window to the car park with people arguing with locals, or long-term residents, there. The next room played their music into the night and the hotel reception after hours number had the police emergency number as a contact. The lightbulbs were removed from the hall lights and this was where the bathroom sinks were, there was no door, just washbasins to use in the dark.”
Under the headline “Problem Motel”, online reviewer ‘Pearcepots’ also shared their “unforgettable memories”, labelling it as somewhere “you do not want your family in”.
These online reviews matter, according to Otago University’s Professor Juergen Gnoth, who specialises in studying tourists’ expectations, choices and behaviour.
He describes online ratings as “the mechanism with which this industry works”.
“I think they are very important, people will use them, particularly when it comes to holidays,” he says.
“It’s definitely true that tourists would be looking at gradings and comments; three or four of those going in the same direction would change minds.”
Gnoth’s view was echoed by the University of Canterbury’s Professor Girish Prayag, another expert in tourism consumer experiences.
He does have some good news though – he doubts international visitors will be aware of, or influenced by, these reputational problems.
It’s a different story for the domestic visitor however; the only game in town while borders have been closed.
“Definitely, there will be reputational damage for the domestic tourism market,” Prayag says.
“There are just too many domestic tourism options for Kiwis to spend their dollars, and families in particular, will stay away from destinations that are getting negative press on drugs, crime and gangs.”
None of this is news to Wilson, who sat down with Stuff in the RED office to discuss the impact housing so many homeless people across Rotorua’s motels is having on the city’s visitor sector, which according to Infometrics 2019 data, contributes 17.2 per cent of its GDP.
Asked directly whether the MSD motel situation, and the continual background hum of crime and anti-social behaviour, is beginning to impact Rotorua’s reputation as a visitor destination, his response is candid.
“Yes. Without a doubt it’s having a reputational impact.”
He says the online reviews are creating a problem too.
“Everyone assumes all the accommodation here is in that space; the reality is we have a lot of other tourism options, hotels, all the holiday parks, none of these run any kind of long-term clients.”
Attitudes at the top of Rotorua’s police appear to be shifting on the issue too.
In March last year Rotorua Area Commander Inspector Phil Taikato told Stuff it was largely a “perception” that crime was rising around the MSD motels.
He even suggested a more sinister motive: “You’ve got all these young brown bodies, people walking up and down Fenton St, and people don't like it.”
Now, Taikato admits: “Police have seen an increase in calls for service in the area known as the Fenton Strip including Rotorua's CBD”.
One resident who lives close to many of the Fenton St motels, and who requested anonymity over fears for their safety, provided a summation of their experience of the past few years.
“Constant police call-outs, gang brawls, domestic violence, drug dealing - it's all prevalent.”
Wilson isn’t afraid to point the finger at MSD either.
He says the reputational issues came to the fore because of what was called the ‘mixed model’ approach, where MSD clients and paying guests would find themselves under the same roof.
The problems that caused were acknowledged in May last year when Housing Minister Megan Woods and Social Development Minister Carmel Sepuloni announced changes aimed at scrapping the model.
At that time, Woods said the changes would “bring certainty to the Rotorua accommodation sector by having motels used exclusively for emergency housing, and help ensure there is separate suitable accommodation facilities for domestic and international visitors.”
Woods’ tone has now changed somewhat, and when Stuff asked for updated comment she qualifies: “The majority of Rotorua motels are not mixed-use.”
Sepuloni also confirms that the ‘mixed model’ hasn’t been axed entirely.
“MSD have advised me that the majority of Rotorua motels where people receiving Emergency Housing Special Needs Grants (EHSNGs) are staying are not generally mixed-use,” says Sepuloni.
“However, some motels may choose to accept both guests booking directly with the motelier and guests experiencing housing distress, supported by the Ministry with an EHSNG.”
Wilson says RED is strongly opposed to the ‘mixed model’, and that “it appears MSD hasn't kept up its end”.
“They’re still running their voucher scheme, MSD have not done their part, and that’s really the potential for us to have damage around our reputation.”
The motel issue has become so prevalent in Rotorua, there’s even a pressure group set up to lobby against it.
Restore Rotorua was established by Trevor Newbrook for one reason: “how it’ll effect tourism in Rotorua, and the damage it’s doing to our local economy”.
Like everyone Stuff spoke to, Newbrook has sympathy for those who find themselves living in Rotorua’s motels, especially the families, but he says there appears to be no long-term plan to address the issue.
“It’s lasted too long, and it’s growing.”
He also says there are applications before council for an additional 13 motels to be used for temporary accommodation.
“We need to have a sinking lid policy. At the moment, we have the complete opposite.”
Restore Rotorua commissioned a report from NERA Economic Consulting examining the wider economic impact of losing one motel, the Boulevard Motel, to tourism.
That motel was acquired by Kāinga Ora in an $8.1m deal back in July.
The NERA report estimates the loss of that one motel, and the flow-on impact, will result in “a loss of annual domestic tourism expenditure to Rotorua businesses of approximately $3.4m”.
Wilson agrees that at face value, it’s a compelling argument. But it’s also wrong.
He says there is no problem with availability of rooms in Rotorua. The problem has been they’re often lower-end accommodation, where players are in a race to the bottom on pricing to attract customers.
This does nothing to help towards the Government’s goal of a post-pandemic shift to what’s euphemistically called ‘higher net value’ visitors – richer people who stay longer, and spend more.
“If we really want to see redevelopment, we need to see yields [per room] lift, then we would see the right kind of development happening, or refurbs,” Wilson says.
“We've had too many rooms sitting in the wrong class; we need to see some of those rooms disappear so we can see yields lift and investment.”
Another issue raised by Newbrook and others is that people who still visited Rotorua just stayed the night, and spent the bulk of their money elsewhere.
Reg Hennessey, owner of Hennessy's Irish Bar, and president of the Hospitality Association’s Bay of Plenty branch, says Rotorua’s location, close to Tauranga, Whakatāne and Taupō, means “people don’t have to stay in Rotorua to visit Rotorua”.
December 2021 data from Infometrics on tourism spending seems to add weight to that view, with tourism expenditure down 7.1 per cent in Rotorua – and up 7.1 per cent across the wider Bay of Plenty.
Nationwide, there was a 3.9 per cent rise.
The damage being done to Rotorua’s reputation was also spelt out, albeit inadvertently, by Wilson’s predecessor.
Back in October the Bay of Plenty Times reported that Oscar Nathan, now the chief executive of Tourism Bay of Plenty, had told Tauranga councillors they should take advantage of Rotorua’s “accommodation issues”.
Tauranga had a “massive opportunity”, he said, due to “massive housing and accommodation issues. Essentially their downstream negative is our upstream benefit”.
Contacted for comment for this article, a Tourism BOP spokesperson said Nathan “will stay out of that discussion”.
Rotorua’s two resident MPs, National’s Todd McClay and Labour list MP Tamati Coffey, both agree the issue is causing the city reputational damage – but are poles apart as to the real cause.
Coffey says homelessness in any city would impact its reputation, but that compassion is the correct response “because visitors respond to the messages that we put out”.
“They see our locals trashing our beautiful city on various online platforms. They hear our locals saying it’s better to go to Tauranga or Taupō,” Coffey says.
“They read about our ‘local dumping ground’ because the local National MP keeps telling them that. We don’t need anyone else to damage our reputation – we’re doing it ourselves.”
Meanwhile, McClay says he’s concerned the ‘mixed model’ approach has not been scrapped, and describes hearing worrying stories from people staying on Fenton St about intimidation, violence and gangs.
“It’s an extremely difficult story to turn around.”
He also takes a swipe at Coffey’s comments.
“He said we’re doing it ourselves? He means the Labour government,” McClay says.
“Tamati Coffey and the Labour government are responsible; they have been using it as a dumping ground.”
Rotorua Mayor Steve Chadwick, who coined the “dumping ground” description back in 2020, says the council has been advocating “strongly from the beginning against the long-term use of motels for emergency housing, and against mixed use by motels”.
“And we continue to do so,” she says.
“I have raised our concerns with MSD Minister Sepuloni, asking that this be addressed, and we have lobbied Minister [Stuart] Nash from a tourism and regional economic development perspective about the need to address the problem of unmanaged motels and seeking targeted economic support for Rotorua, given the significant impact on our tourism sector.”
Chadwick expressed her views more forcefully in a letter to Sepuloni, obtained by Stuff via an Official Information Act request.
“Our community is suffering due to drug use, violent behaviour, vandalism and other anti-social behaviours that they are seeing on a daily basis, in the proximity of the motels providing emergency housing,” she said.
“The perception is that those living in emergency accommodation are destroying our city and its reputation.”
Woods tells Stuff no-one thinks motel accommodation is a desirable long-term solution for homelessness, but that it’s better than people and families living in cars and sleeping rough.
She also cites the lack of investment from the previous government for the acute lack of affordable housing, and says the current government is “not a government that stands idly by”.
Woods says a Rotorua housing taskforce is developing short-term solutions, while work on permanent housing is underway.
She says approximately 270 new public houses are under construction in Rotorua, “or being planned”, with the first expected to be ready mid-2022.
Sepuloni also cites under-investment in housing, and says that while progress is being made, “it will still take time to build the number of houses Rotorua needs”.
Both Sepuloni and Woods decline, however, to provide an answer for when Rotorua’s motels will no longer be needed to house homeless people, though Sepuloni says the Government is “committed to ending the need for emergency housing by building more houses”.
Wilson says ultimately, the only solution is more houses, “and that’s moving pretty slowly”.
He also acknowledges that what Rotorua is seeing now is the culmination of an almost perfect storm of issues that date back decades – housing shortages, deprivation, gang violence, drugs and mental health issues – all exacerbated by a global pandemic.
He also notes that many of the emergency accommodation providers that are being actively managed and provided with wrap-around services are faring well, and that could offer wider lessons.
“The spillover impact of unmanaged motels for short-term accommodation isn’t good for anyone.”