There are now far more rooms available in hotels and motels for traditional accommodation, which Hospitality NZ says “has driven room rates down”.
Meanwhile, a charity says some single people in need of housing are now more vulnerable.
The Government set a target of reducing the number of households in emergency housing by 75% by 2030 – a figure it reached nationally in January.
The Ministry of Social Development (MSD) says people who have a genuine housing need and have exhausted all other options, and meet their responsibilities, continue to be eligible for emergency housing support.
Currently, MSD uses about nine emergency housing suppliers across the East Coast region, although it did not disclose which ones.
Comparatively, during the 12 months to March 2022, there were about 50 accommodation providers (mainly motels and hotels) in Hawke’s Bay alone that provided some level of emergency housing.
Changes for hotels and motels
Bluewater Hotel in Napier was previously the biggest emergency housing provider in Hawke’s Bay, earning almost $4 million in a single year from emergency housing grants.
However, that hotel has since returned to offering traditional accommodation, along with many other accommodation providers.
Former motelier Steve Gibson, who is running for the Hastings mayoralty, sold his two Napier motels in recent years, including Pania Lodge Motel a couple of weeks ago.
That motel was used for emergency housing right up until April, when Gibson’s arrangement with MSD came to an end and it returned to traditional accommodation.
He said, in his opinion, the accommodation sector had largely returned to what it was like around 2015-16 – prior to motels being used for emergency housing.
He said moteliers could expect quiet winters again but that would pick up in the warmer months.
“In summer it will be back to normal for motels, and bubbling along nicely, and there will be opportunities on the sporting weeks and [long weekends].”
He said he had noticed an uptick in motels and hotels up for sale in the region.
“I think there are more [up for sale].
“They have had some good years with emergency [housing] and it is not going to be the same.
“You will make a living [from owning a motel] but you are not going to retire on it.”
In terms of his decision to sell his two Napier motels, the former police officer said he had been running them for a decade and it was time to move on.
He said a positive to come from emergency housing in motels was “I think we produced better tenants”.
“When they were slipping up we said ‘hey, you are going to lose your accommodation if you don’t pick up your game’.
“And they did pick up their game and when they went into Housing NZ houses, you have a better tenant who is more likely to look after their houses.
“So I think the motel system worked in that sense.”
Hospitality NZ chief executive Steve Armitage said changes to emergency housing had “opened up the accommodation market significantly”.
“With more rooms now available, the market is freer but also more competitive, which has driven room rates down.
“For many operators, especially those that had relied on emergency housing as a stable income stream, it has become tougher to maintain margins.
“We’re seeing this play out in regions like Hawke’s Bay, where a number of providers had been part of the emergency housing system and are now navigating a return to traditional tourism and business travel.
“There is less money flowing through the sector overall, and rising operating costs are compounding the pressure.”
‘Sleeping on the streets’
Whatever It Takes Trust chief executive Sam Aberahama said the trust had noticed some flow-on impacts from the emergency housing changes.
“Single people in particular don’t have many options if they don’t have whānau to support them or have mental health or addiction needs that prevent them from finding lodge accommodation, [and] can end up sleeping on the streets.”
MSD East Coast regional commissioner Steve Smits-Murray said ministry staff were pleased “we have been able to help people find accommodation that is more secure, and more suitable to their needs”.
When asked about concerns of the potential for homeless numbers to grow, Smits-Murray said emergency housing remained available.
“When people come to us for housing assistance, emergency housing is not the first option we consider,” he said.
“Instead, our first move is to look at all their other options to avoid homelessness, and if someone who applies is eligible for a different and more suitable type of support, we will provide that instead.”
He said that could include exploring private rental options they can afford, financial support to help them stay with family or friends, help with rent if they’re behind, help with paying bond for a new property, help negotiating with landlords to retain a tenancy, paying bond and rent in advance for a new place, financial assistance with moving costs, or offering a landlord tenancy costs cover.
A Government housing priority (known as priority one) also bumps families with dependent children to the very top of the social housing waitlist, where they have been in emergency housing for 12 weeks or more.
Gary Hamilton-Irvine is a Hawke’s Bay-based reporter who covers a range of news topics including business, councils, breaking news and cyclone recovery. He formerly worked at News Corp Australia.
