Fifteen Rotorua motels were each paid more than $1 million for emergency housing over two years.
Figures released by the Ministry of Social Development (MSD) under the Official Information Act show $62.9m was spent on emergency housing in the Bay of Plenty between July 2019 and June this year.
This included suppliers from outside of the region and payments in arrears for previous or future accommodation for clients who have moved but not yet updated their addresses.
Fifteen Rotorua motels accounted for more than $24.7m of the total.
Moteliers said emergency housing was a lifeline and provided an income now international tourism had declined.
The top earner was the Grand Treasure Hotel, which was paid $3.44m by MSD for emergency housing special needs grants for 267 clients.
Spa Lodge followed with a total of 1665 grants worth $2.59m for 225 clients. Both were approached for comment.
Seventh-highest earner Alpin Motel & Conference Centre was paid $1.56m from 1005 grants for 228 clients.
A spokesman said the base rate was about $150 per person per night and lower than the $230 per night motel rates.
He said MSD grants kept the 40-room motel going and it became solely emergency housing in the March 2020 lockdown.
The motel screened all potential clients coming in for an MSD quote.
"We run it like a military camp, we're pretty strict here."
The motel was previously announced as one of 12 to be contracted by the Ministry of Housing and Urban Development (HUD) for exclusive emergency housing use.
Astray Motel & Backpackers earned $1.37m from 822 grants for 132 clients.
Owner Tim Gao said taking on emergency housing clients was about survival and the motel would do it until international tourists returned.
"If you are starving, you don't really have a choice. We are starving," he said.
"We have to have them, otherwise we die."
The rooms were rented at market rate - between $60 and $150 per night.
He felt for accommodation providers that didn't have the option of emergency housing while the borders were shut and domestic tourism was slow.
"We feel lucky enough to have emergency housing [even though] it gives us headaches."
Gao said it was common for rooms to be out of use for a week after a client left because of smoke odour or other bad smells and "all the damage".
On one occasion clients triggered the fire sprinklers, flooding rooms.
Three rooms needed carpets replaced at a total cost of $10,000, taking them off the market for six months.
Ongoing costs included replacing stolen items and fixing regularly broken door frames and holes in walls.
In a year, the motel also paid more than $100,000 in rent, $10,800 in power, and spent $6000 on cleaning products, and $4800 on cleaners.
Gao said the motel sacrificed its reputation and Booking.com ratings had dropped from eight to six since taking on clients in half of their rooms.
The other 12 motels that earned more than $1m in the timeframe were Manhattan Motel ($1.71m), Kuirau Park Motor Lodge ($1.69m), Union Victoria Motel ($1.64m), Fenton Court Motel ($1.59m), Geneva Motor Lodge ($1.4m), Rotovegas Motel ($1.4m), Golden Glow Motel ($1.3m), Cactus Jacks ($1.56m), Brylin Motel ($1.18m), Pure Motel & Guest House ($1.13m) and Ashleigh Court Motel ($1.07m).
The motels were approached for comment. Union Victoria Motel, Cactus Jacks, Brylin Motel, Pure Motel & Guest House and Ashleigh Court Motel could not be reached.
Restore Rotorua chairman Trevor Newbrook said many residents were concerned about the emergency housing crisis and the safety issues around it.
He said the payment figures "shocked" him and seemed, in his view, like a "huge waste of resources".
"People, especially families, deserve a proper house and not a one-room motel [unit]."
Waiariki MP Rawiri Waititi said, in his view, the money spent was not justified if it continued to keep people on a "never-ending hamster wheel" at the "bottom of the heap".
Rotorua National MP Todd McClay said he believed it was "irresponsible spending" of a "huge" amount of money and the Government needed to start building houses.
In his view: "It's obvious that the problem is getting worse and it's obvious the Government doesn't actually have a solution."
"They could build hundreds and hundreds of houses instead of leaving people in motels."
McClay said increasing houses would be fairer to those left to "languish" in motels as well as the Rotorua residents who he believed were "sick and tired of excuses".
In the OIA response, the Ministry of Social Development said special needs grants were paid for commercial accommodation for those in urgent need.
It was initially intended to be for seven days, but, given the high level of need, subsequent grants could be paid for up to 21 days at a time, it said.
Under the grant model, accommodation suppliers were not contracted by MSD and could stop providing emergency housing services. Any agreements or conditions of stay were between supplier and client.
MSD acting regional commissioner Brent MacDonald said while the Ministry of Housing and Urban Development (MHUD) and Kāinga Ora worked to increase housing stock, it was focused on giving people in urgent need somewhere to stay.
Clients were expected to get the same quality of service as a guest and MSD talked to clients regularly about their accommodation options and raised concerns directly with suppliers.
When those could not be suitably resolved, the ministry tried to find alternative accommodation. Clients could reject a suggested accommodation option.
He said clients agreed to pay for damages they were responsible for and the ministry provided one week's worth of accommodation as a safeguard for owners.
MHUD external engagement and communications manager Dennis de Reus said it worked closely with Kāinga Ora, which was working to deliver at least 190 public homes in Rotorua by 2024 under the Public Housing Plan.
Kāinga Ora has delivered 63 public homes in Rotorua in the past three years, 35 more are under way and planned.
Thirty-seven public homes are planned for the site on the corner of Ranolf St and Malfroy Rd.
Last week Kainga Ora announced it had bought land on Collie Drive in Pukehangi and planned to build 60 homes for people on the housing register by the end of next year.
A Fenton St property was being upgraded to create transitional housing for more than 80 people by mid-next year. It may later be used for mixed housing.
He said the high housing deprivation was a result of generations of under-investment in housing, a shortage of available land, rising rents and house prices and growing population that added to the demand for emergency housing.
"It won't be fixed overnight."
The Government committed a $55m shovel-ready investment in stormwater and transport infrastructure to enable future development by Ngāti Whakaue, he said, along with other funding for Māori-led housing initiatives.
"The Government has a duty to ensure vulnerable people have a roof over their heads tonight while also investing in and supporting new housing. This isn't an either/or thing."