The Government is about to start recontracting hotels as Covid managed isolation facilities (MIFs) to the end of the year and says it's confident those already signed up will want to continue.
Not surprising given the country's largest accommodation membership organisation, Hospitality NZ, says if it wasn't for MIF contracts, hotels in Auckland where most facilities are, would be less than 30 per cent occupied because of border closure.
Due to the contracts, which expire at the end of April, the Auckland hotel sector shows an aggregate trading of 57 per cent, said chief executive Julie White.
"Hospitality and tourism are not trading as buoyantly as perhaps suggested. There's an enormous amount of fixed costs in running hotels. Without MIF business, they might virtually have to hibernate their hotels and would be accruing hundreds of thousands of dollars of debt a month."
Hospitality NZ has worked directly with the Ministry of Business, Innovation and Employment (MBIE) on the Covid isolation response. MBIE oversees the Government's managed isolation and quarantine (MIQ) regime. Around 32 hotels are understood to be in the programme.
Hospitality NZ, which represents more than 900 accommodation providers, wants MBIE to make 700-1000 more rooms available under MIQ. MBIE's latest available figures show a total operating capacity of 4500 rooms across Auckland, Hamilton, Wellington, Rotorua and Christchurch.
"There are 7000 rooms within MIQ - only 70 per cent are being used in case something like the Pullman (Auckland hotel transmission case) happens," said White.
"This hinders high skilled, high value people coming into the country, they are the job creators."
White said Hospitality NZ believes the extra rooms proposal is feasible but the response has been it isn't possible because the health infrastructure doesn't support it and not all hotels are fit for purpose.
She said the additional MIQ rooms could be privately managed or run by the Government. Currently all MIQ is run by the Government.
"That would be welcomed across pan-industry from aged care to construction. We all need high skilled staff."
The latest MBIE 14-day forecast (as at February 4) shows that out of Auckland's 2901 room operating capacity, 2668 rooms are allocated; Hamilton has 233 rooms, 223 are allocated; Rotorua has capacity for 393, 431 are allocated; Wellington has 140, 118 are allocated and Christchurch has 833 room capacity with 775 allocated.
The forecast nationwide for room operating capacity is recorded by MBIE as 4500, with 4215 allocated. Rooms are needed for 14 days.
Meanwhile, White doubts hotel reputations and brands are damaged by guest Covid-transmission incidents such as occurred at the 5-star Pullman Auckland hotel recently.
"Keep in mind (Covid) protocols and processes are driven by the Government - they're not being made up by each individual hotel."
The Pullman Auckland was emptied of guests at the weekend and deep cleaning is under way. It has stopped accepting MIQ guests.
Pullman hotels in New Zealand are owned by the global hotel group Accor.
In a written response to Herald questions about the Pullman Auckland's future and possible impact on its brand, Accor said: "Our hotels and teams are proud of the role we have played in supporting the New Zealand Government and protecting our communities. Due to our contractual obligations with the MIQ we are unable to provide further comment."
White said when hotels took on MIF contracts their owners and management were very conscious of the pros and cons of the deal.
"The pros are ...the commercial decision is easy because they are not displacing other activities with the borders closed.
"The cons are if you get an outbreak through no fault of your own and there is the potential for brand reputational damage.
"So when they come out of these contracts they have to have a robust strategy how to get back into the market. Whether it's a complete shutdown and complete clean top to toe, or complete rebrand or soft refurbishment - our members are very conscious of this and I know are considering (everything)."
MBIE said details of hotel contracts were commercially sensitive.
Herald inquiries suggest at the end of last year the Government directly employed around 4000 people in MIF/MIQ jobs in 32 hotels nationwide across Covid-security roles.
How many people the MIF hotels employed, such as chefs and guest service staff wasn't known.
MBIE would not discuss financial details of its contracts with hotels.