Hilton's Australasian boss says the hotel industry needs to pay more to keep staff, or face continued worker shortages which are already leading to a cap on rooms sold and keeping bars closed.
Paul Hutton, Hilton's area vice-president and head of Australasia, said demand had surged back strongly this year. Across the region, that meant his chain's hotels were now 70 per cent occupied.
While New Zealand was lagging Australia, Hilton hotels in Auckland and Taupō were 70 per cent and 60 per cent occupied during the past month.
"We're quite bullish on what we're seeing and particularly in the year to date." Occupancy had been down around 40 per cent but this had grown, and "with good rates too".
While the number of international visitors was still low, those from the United States who could enter the country from the beginning of May were now running at the same level as those from Australia at the Hilton Auckland.
"And I've seen the same thing in Fiji and other places. I was quite gobsmacked at the amount of longhaul West Coast American business that was available already."
Hutton said the Hilton had not been expecting a recovery until next year but was now enjoying one months ahead of that.
The biggest challenge now for the brand's seven New Zealand hotels was the tight labour market.
"It's the basic things, cleaning rooms, welcoming guests, gardening, landscaping, engineering, qualified chefs, to the point where we won't be reopening some [hospitality] outlets," he said.
"It's a worldwide phenomenon. But here you have just waited so long for the recovery."
Hutton said the relaxation of working holiday visa rules may be a short-term fix but he was worried staff would arrive at the wrong time. They might not be in place for the ski season, when he hopes Hilton's two Queenstown sites will be in high demand. The chain faced having to put a cap on rooms sold, of up to 15 per cent.
While some business groups, including some in tourism, had complained about the Government's push to put up wages, Hutton said it was on the right track.
"People have had to make choices; they haven't had work in our industry for two years so they've gone to aged care, they've gone to logistics and so we need to find a new generation of people for what's a really cool industry — I'm being completely brand agnostic here."
He said higher pay - pushed up by minimum wage and living wage increases - would add cost to the bottom line, but hotels were recovering financially.
Staff had to be recognised, said Hutton, who has been with Hilton for 37 years.
"Because we're losing people from the industry. It's long hours, it's weekends. And it hasn't necessarily been that well paid."
Other industries have been more desperate to lure staff and hotels needed to meet the market. "If not, we're going to be in this incredible situation that we won't be able to trade our bars and restaurants again."
Among its other properties, Chateau On the Park in Christchurch will re-open on June 10 following its involvement in the MIQ programme.
In March it opened DoubleTree by Hilton Karaka, a 122-room hotel owned by New Zealand Bloodstock and on the grounds of the organisation's sales pavilion.