Motels are empty but bills keep coming in

Up to half of the motels across the region are "teetering on the edge of financial collapse", the Otago Motel Association has estimated.

Association president Alex Greenan said whether motels were open or closed, they had ongoing costs like rates, electricity and rent.

"Even though we’re empty, the costs are still there.

"Rent is the big one."

He said there were about 200 motel owners across Otago, and most of them leased their buildings from landlords.

About a third of a motel owner’s income went straight to paying the rent.

He said some leases stated if there were no occupants, the motel owner did not have to pay rent — but some motels had had to remain open to accommodate essential workers during the Covid-19 pandemic.

"So they’ve had dribs and drabs, maybe the odd nurse or Winz person that needs help.

"But the income from it is minuscule. It doesn’t pay the rent. But they’re open, so therefore, they can’t apply for [no occupancy] ... to get out of paying the rent."

Mr Greenan believed about 50% of landlords around Dunedin were helping their tenants by cutting their rental fees.

"We appreciate that because they’ve got costs, too.

"But a lot of landlords are not coming to the party. I’ve been speaking to some members who are in tears because they’re not getting good communication with their landlords.

"Some landlords have told their tenants, point blank, to suck it up.

"About 90% of Dunedin motel owners are suffering financial difficulty and a significant number are teetering on the edge of financial collapse."

Mr Greenan believed owners in other parts of the region would be similarly affected.

The Dunedin City Council could help the situation in Dunedin by providing rates relief to motel owners, he said.

He said the council was expected to meet at the end of the month to discuss the issue, but believed it should have been done sooner.

"It’s not next month we need some help — it’s right now."

Many motel owners would have to borrow money to survive until next month, he said.

"And next month is going to be bad, too. So what are you going to do? At what point do you walk away, which is what we are all looking at?"

Dunedin Mayor Aaron Hawkins was unable to be reached for comment yesterday.

In Invercargill, 295 on Tay Motel owner Geoff Shepherd said the situation was very similar in Southland.

"It’s very hard down here, too."

It was estimated there were about 20 motels in Invercargill and up to 60 across the region.