Natalie Ghiggioli said bookings at her business, Beach Lodge Motels, in St Kilda, had left her struggling severely for seven months.
Bookings had not recovered since Covid-19 alert levels escalated again in the country in August, she said.
The Australian citizen (59) moved to Dunedin from central-west New South Wales at the end of 2017, with her two children.
She poured $1million into buying and renovating Beach Lodge Motels and increased the business in the second year.
Occupancy was running from 90% to 100% until March 25 last year, before lockdown.
Within three days, phone cancellations had wiped $250,000 of forward bookings, she said.
The business had been heavily reliant on international visitors.
"Now I’m competing for New Zealanders, along with every motel," Ms Ghiggioli said.
"New Zealanders can’t keep pumping us up forever."
Forward bookings had dwindled and there was only one booking during the winter time, she said.
Many other small motels were in the same situation.
Ms Ghiggioli said she had used savings from the sale of a house in Australia and had borrowed money to set up the business.
She had been close to paying off the loan when the turmoil struck.
Ms Ghiggioli was now paying more money than the business was earning, she said.
"I had not been here long enough to accumulate savings and it was a 10-year plan.
"This is my superannuation. This is my income. This is where I live."
She laid off 12 casual staff last year and kept one part-timer, for whom the business had received a wage subsidy.
The business had also taken a $12,000 government loan, at 3% if not paid back within 12 months.
That equated to less than a month’s rent, she said.
Ms Ghiggioli is critical of the motel industry’s reliance on booking.com.
Bookings for her motel came almost entirely from the Dutch-owned booking agency.
"The majority of the public believe booking.com is a booking fairy that magically gets them discounts for no fee," she said.
The booking agency actually took the discounts from small-business owners, then charged 15% for the "privilege", she said.
Booking.com advertised a starting price of $200 for a unit at her motel.
She normally charged $155 for a room, but through booking.com "rewards" the price dropped to $117, which was unsustainable.
Otago Motel Association president and Dunedin Palms Motel owner Alex Greenan said there was a lot of hurt in the industry, describing it as "extremely tough".
The association represents about 50 motels in and around Dunedin.
There were varying markets in Dunedin, such as beachside and inner-city, he said.
He urged landlords to help, if they could, to take pressure off businesses.
Mr Greenan said the New Zealand accommodation industry, or the Government, needed to create its own booking platform to compete against booking.com and keep money onshore.
Booking.com was an easy booking format for international travellers, he said.
The overseas platform did not pay tax in New Zealand and the money went offshore.
"They are taking 15% out of our pocket and taking it over there."
