Bay accommodation providers say illegal hostels are stealing clients by undercutting prices and turning a blind eye to the work-permit status of foreign workers.
Targeting mostly seasonal workers who come to the Western Bay of Plenty to work in the kiwifruit industry, the informal “pseudo hostels” actively advertise on supermarket community boards and often cram up to 20 people in a single house, hostel owners say.
Tracey Wallace-Hutchins, co-owner of the Hairy Berry Backpackers in Te Puke, said her business was losing out to illegal hostels that were charging $30 to $40 a week less than she was able to.
The pseudo hostels usually presented themselves as flats but high numbers of people in the houses and regular short-term turnover differentiated them from a normal flat, Mrs Wallace-Hutchins said.
“It’s frustrating to work really, really hard to build up a business and go through the legal regulations that we have to – resource consents, fire safety codes, health and safety protocols, building codes – and someone else can go and set up a place down the road [without doing any of these things].”
Pseudo hostels were not paying taxes, were unsafe and were stealing income from legitimate businesses, she said.
Mrs Wallace-Hutchins’ claims were backed up by two Tauranga hostel owners who said the number of illegal hostels in the city had increased.
One hostel owner, who did not wish to be identified, said pseudo hostels cost his business about $40,000 a year.
Illegal hostel operators had even come into his hostel to “poach” backpackers. “It’s a quick buck and they know that the council is pretty toothless and it will be ages until something happens,” he said.
Sheree Kearney, of Bell Lodge, said she had been told by backpackers there were two other hostels on the same street as her. “We get people coming here all the time and they say ‘around the corner, it’s only $80′.”
The three hostel owners spoken to by the Bay of Plenty Times help backpackers with work permits find seasonal work, however, they felt they were losing out because of contractors who did not check permits.
Western Bay of Plenty District Council customer services group manager Steve Hill said the council investigated complaints but was not a “policing agency”. If an investigation found a hostel operating outside of the district plan, the owners would be asked to meet compliance requirements or cease operating.
He said the council had received one complaint regarding the operation of an illegal hostel in Te Puke.
The complaint was investigated and resolved, but there were no details on record about how it was resolved.
Mrs Wallace-Hutchins said she had made the complaint and as far as she knew the house was still operating as a hostel. No one was home when the Bay Times visited last week but neighbours confirmed a backpackers’ operated on the property.
The Tauranga City Council said it had investigated five complaints of illegal hostels since 2008.
In one case a student accommodation reduced the number of occupants to fit within the council’s requirements, however three other properties were classed as “shared accomodation” and the fifth was in the process of proving it was “shared accommodation”, rather than “visitor accommodation”.
“The main difference between the two activities is the permanency of the activity [less than three months' occupation for visitor accommodation versus more than three months occupation for shared accommodation], and the number of people staying at the site [shared accommodation is limited to a minimum of six permanent residents and a maximum of eight permanent residents]. Six or less residents is considered to be an independent dwelling unit,” environmental monitoring officer Julie Shanks said.