Further to TRM’s rave last Sunday about how some motels offer better value than Airbnb, the following feature from NZ Herald on Friday argues the case much better:
Lani Hagaman: I’d do better investing in Airbnbs than hotels
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As an owner and investor in the New Zealand hotel sector I sometimes wonder if our political leaders at all levels understand tourism and comprehend the cost and commitment hoteliers make to both tourism and the country as a whole.
For example, Airbnb competes directly against hotels yet creates virtually no employment.
My company is responsible for about 900 local employees. We hoteliers must comply with a huge number of Government requirements such as financial and commercial taxes, health and safety regulations, and industrial laws. This compliance adds to the overall cost of running a hotel.
Airbnb has almost none of these costs to contend with. Is this fair?
Last year an Airbnb rental went up in flames, causing injury. The rental did not have fire escapes and other fire equipment which a hotel is required to have. Airbnb operators are not obliged to have their appliances safety checked, an expensive process which we must do every couple of years. Shouldn’t Airbnb guests expect the same levels of protection they would receive in a hotel?
I am not saying Airbnb is not a valued part of our accommodation industry – it certainly is. But it’s time the Government had a realistic look at the commercial accommodation sector to ensure all operators are treated equally, that all costs are distributed proportionally and that all guests, irrespective of whether they choose a backpackers, a five-star resort or an Airbnb, receive the same standards of protection provided by legislation and compliance.
And what about the poorly constructed and ill-conceived Auckland targeted rate on commercial accommodation providers? Is it fair that this additional tax burden is targeted at only parts of the accommodation sector?
Mayors and local councils around the country are often talking about introducing a bed tax. I understand a number of smaller towns, such as Franz Josef and Queenstown, cannot sustain the infrastructure in their areas while visitor numbers climb. But why is a bed tax or a targeted accommodation rate always suggested?
Where is the contribution from the bars, restaurants, retail or transport sectors, to name a few who also greatly benefit from the increased visitor nights?
As Tourism Industry Aotearoa has previously pointed out, visitors to Auckland spend around $7.5 billion annually. The commercial accommodation sector receives less than 10 per cent of this spend but is now being expected to contribute almost 100 per cent of the targeted rate. This is ludicrous.
There is a shortage of accommodation in some areas of the country but where are the incentives for me to put my personal money on the line and take the risk that the hotel will be able to cover itself financially while meeting all its legislative responsibilities? From where I sit, there aren’t many.
With the ridiculously high cost of building in New Zealand, we could spend $60 million building a new hotel in Auckland and suffer all the inequalities already mentioned. Or we could buy 60 modest three-bedroom houses for the same money and rent the resulting 180 rooms on Airbnb with almost no compliance costs.
Option one would likely employ around 100 people, and pay rates and taxes on 100 per cent of its commercial activity. Option two would employ next to no-one and, if structured correctly, pay virtually no commercial tax and contribute little, if anything, to the targeted rate. So, let’s make it fair.
This will ensure new hotels are built, and the industry continues to provide a positive guest experience, to employ hundreds of thousands of Kiwis and others, and to contribute to New Zealand’s largest export earner.
The option of a border tax is being considered but once again the Government seems to want to make it difficult. Only some countries are targeted and they are often the ones already paying a fortune to even reach our shores.
Where are the funds from GST collected from the visitors? Why is that money not redistributed instead of creating yet more rates or taxes against our industry?
I want local and central Government to sit down with the accommodation sector in a constructive manner and reach a fair resolution for us all.
All we ask is for a level playing field. Treat us all the same, regulate us all the same, tax us all the same. Let’s not kill the goose that lays the golden egg.
• Lani Hagaman is executive chairwoman of the Scenic Hotel Group.
TRM’s Report last Sunday repeated below…
B&Bs v’s motels? TRM is doomed?
Taupo moteliers are reported in Taupo Times as struggling to come to terms with what they claim is unfair competition from B&B’s in the form of homestays booked through Airbnb and Bookabach. TRM concur. Life is so unfair.In the Taupo district alone Airbnb have over 900 listings. Bookabach have over 600 listed. (Stats pinched from the front page feature article in Taupo Times 13 July by Chloe Blommerde)
By comparison, across NZ in 2017 Airbnb had 37,600 listings, Auckland had 10,900 listings, Queenstown had 2,300 listings, and the other most important hub of NZ tourist angling – the little jewel in the crown – Turangi had over 100. These most popular tourist gems like Turangi are now targeted for this type of business – evidence is a recent sale of 7 residential properties to one Auckland buyer who then listed them all on Airbnb.
Further research as at February 2018 indicated of the 929 Airbnb Taupo listings, 599 were complete houses – that is 600 more than five years ago or about 1500 more bedrooms catering for tourists. That equates to adding around 75 typical motels like TRM. That is real competition that we have to overcome. But how? SWMBO is TRM’s business strategy advisor who has Her own cunning solution, providing far better customer service and benefits that Homestays cannot compete with. Read on…
The basis of complaints from motels are that none of the 600 have to meet any council compliance measures. So unfair! Obviously motels are struggling to compete with such a large sudden increase of rooms available through all residential suburbs. All they ask Council for is parity – that these competing businesses are treated similar to motels as businesses. That is fair enough. i.e. In Turangi the domestic water supply to all these Airbnb houses is free. Meanwhile TRM pay commercial water rates, commercial Council rates, commercial fire protection, etc….
Hospitality NZ Manager, Alan Sciascia says “it’s gone beyond owners letting out their house for a week or two while they take a holiday, this is serious business, I am aware of four hosts who between them control over twenty properties… there are over 100 Taupo hosts with more than one property each.”
So if motels are now apparently so obsolete and redundant (?) is TRM doomed? Why should tourist anglers prefer motel accommodation over a suburban house at a similar price?
After 50 years operation as a motel, TRM could try to ignore the competition but realise prospective inmates need to know how TRM has to offer much much more than just accommodation. And that has to be to guests’ advantage…
SWMBO’s (She Who Must Be Obeyed is the relentlessly positive indefatigable delightfully young Manager of everything at TRM) first response was to check TRM occupancy rates. They are much the same as in the previous 12 years. Whew! So Her first worry was solved – TRM should survive, even if there is no profit in it… Fortunately for guests, to maintain the occupancy levels has been at the expense of $ room rates. NZ tourism has enjoyed riding the crest of a wave of success in recent years but motels have not been able to capitalise on this – proven by TRM’s room rates at much the same levels as ten years go. So the inmates have to be on a win on the pure $ economics of their decision.
But in addition to just beds and self contained units, TRM really offers very good value. The advertised room rates have to reflect commissions to agencies like booking-dot-com etc. for overnighters, but for anglers who need to stay longer and return again and again, TRM have an entirely different level of fishy room rates about 15-20% lower!!!. Please keep that to yourself as we do not want to upset tourists. But the message is clear – book directly, avoid all OTA’s (Online Travel Agents) so that you enjoy their commission savings.
In addition, where TRM really win is in the “after-sales-service” department. For any tourists unfamiliar with the region SWMBO offers so many advantages to help make a holiday more enjoyable and memorable. New guests do not need to waste any time on local reconnaissance. It has all been done for them. Then there are the little ‘extras’…
Right from the time they arrive, TRM can even collect them and return them to Taupo airport in TRM’s classic vintage taxi. How can any Airbnb compete with that?
Just that one little extra special service alone illustrates the significant difference in TRM catering to guests requirements, rather than just providing accommodation. But there are many more…
TRM can advise on all the essential info that tourists need, the best places to eat (RUST?) , the best cafe (Creel?), the best tourist package (NZ Rafting?) the best tramping trails (Taranaki Falls), the best most scenic lake stroll (Rotopounamu), the best river trail (Tongariro River Trail), the best physical challenge (climbing Mt. Ruapehu). And just as important, SWMBO will advise where not to go, to avoid disappointment. It’s Her personal touch that matters.
Most important of all for TRM inmates is “info” on trout fishing – where are the best fishing pools (Secret!). TRM have a full range of fishing gear – from rods, reels, waders, wading poles, fly tying gear, etc. – all available free of charge.
Only TRM can offer fishy advantages like hidden stone groynes built on the river bank exclusively for TRM anglers (these provide access to cast into the “eye” of a pool so much easier).
Only TRM offers special bikes (free of charge) equipped to carry fly rods with pannier bags to access pools that others cannot reach.
Only TRM offers a commercial sized smokehouse free of charge for guests.
Only TRM has a choice of rafts available for anglers on Lake O – providing the guests are suitable experienced.
Only TRM has rod racks in every unit.
Only TRM offers free special Tongariro Bucket List maps of 50 pools to fish before you die.
Only TRM has an extensive library of trout fishing books and magazines.
Only TRM has Pumpkin – a friendly dog for guests to take walkies…. etc.
TRM could be likened to more of a vintage trout fishing club with many anglers preferring it as their favourite social meeting place to swop stories and tell lies where they caught their biggest trout. That creates a friendly fishy environment that no Airbnb or Bookabach could possibly hope to compete with. TRM even get anglers staying at local homestays calling in to source latest fishy info. They cannot stay away for long. We understand…
SWMBO acknowledges you all. TRM have so many fishy inmates who have been regularly staying here for many years. We know most of our guests. We love catching up with so many old friends and hearing their fishing tales. So this a BIG thank you for their continued support. We know you have a lot of accommodation choices out there and value your loyalty so much.
Anglers really are such wonderful folk – as indicated in the brief video below:
If you enjoyed that, this one is even better with more touristy stuff…