The Government did not consult surrounding businesses before approving hotels for use as MIQ facilities.
Now a dispute between the owners of the Stamford Plaza Hotel in Auckland and the owners of a restaurant that used to lease its premises is heading to court.
Bo and Edward Viterbo say they were likely among the longest-serving restaurant owners in Auckland, having launched three successful Thai restaurants since 1988.
Their 13-year reign running Grasshopper on the ground floor of the Stamford Plaza Hotel has now come to a bitter end after the hotel became an MIQ facility in July.
Edward Viterbo claimed they had no say in that decision and only found out "by accident" in June.
"We got locked out one day, in the carpark and discovered that they'd actually changed all the locks. That's when we found out that they had been approved as an MIQ," he said.
"We were quite surprised that we weren't been informed about it."
The Stamford Plaza became an MIQ facility in July last year. Photo / Dean Purcell
As busloads of returnees trundled into fenced-off Stamford Plaza in July, the Grasshopper kept taking bookings from the public.
The main entrance remained open while the corridor for hotel guests was closed.
Viterbo said Grasshopper's kitchens were also used to help prepare some meals for returnees, but most of that was done in the hotel's other restaurants.
He said he became increasingly uncomfortable about his staff intermingling with hotel staff behind the scenes.
The Ministry for Business Innovation and Employment (MBIE) said it had now sought clarity from the Stamford Plaza to confirm there was no intermingling that put diners at risk.
Yet Viterbo maintains that staff shared hallways, kitchens and delivery areas.
When a returnee escaped from the Stamford Plaza in July he said Grasshoppers' loyal customers no longer wanted to dine there.
"Our sales showed that. They just took a dive. We ran a campaign on Facebook and asked our customers and out of 300, 299 said there's no way, no way in hell, we're going to that place, because it's just too risky," he said.
"Business just died. So we decided it is really untenable and unsustainable, so we decided to close."
That happened in September, and cost about 15 employees their jobs.
Meanwhile, the relationship between the hotel owners and restaurant owners imploded - and both parties are heading to court.
Stamford Plaza's owners want $270,000 in unpaid rent, utilities, and lease-related fees.
Lawyer for Stamford Land, Benedict Tan, said the dispute has nothing to do with the hotel becoming an MIQ facility.
He said Grasshopper's owners had already been trying to get out of their lease early and already owed money before June.
On the other side, Grasshopper's owners dispute the fees associated with ending their lease and any suggestions they had already tried to get out early.
They claimed they had simply asked for help during disruption from the City Rail Link project and they would not have needed to close if the hotel had not become an MIQ facility.
Bo Viterbo says the Government offered no help.
"They just wanted to get the place as an MIQ up and running," she said.
Last month Auckland Central MP Chlöe Swarbrick wrote to Covid-19 Response Minister Chris Hipkins asking what consideration was given to businesses surrounding the Stamford Plaza before it became one of the country's 32 MIQ hotels.
Hipkins said during site assessments of each potential MIQ hotel, their proximity to other businesses was "noted".
MBIE added that hotels engaged with any affected stakeholders prior to becoming a managed isolation facility, "to ensure any concerns are met".
However, Hipkins said surrounding businesses were not part of the Government's site assessment.
Other businesses surviving
Notably, there has been some happy outcomes for businesses operating in or near MIQ hotels, like Power to the Pedal which runs e-bike tours of Auckland.
It used to store bikes in the Pullman Hotel carpark and meet and greet customers in the foyer, until the hotel became an MIQ facility and the business had to shift down the driveway.
In spite of also losing the international visitors who made up 80 per cent of its customers, the wheels are still turning at Power to the Pedal, which has attracted groups of domestic tourists, and people in the market for e-bikes who want to try them out.
Business owner Eddie Jack was grateful for the help he received from the Pullman Hotel.
"It's been very tough for them. And it's very tough for anyone who works in these facilities because you're putting yourself in an environment where there can be and there has been Covid. So it's obviously a stressful time for them," he said.
"When they first became an MIQ they contacted us to let us know, they helped, they moved our stuff out of the hotel, so when we have contact its all very friendly."
Jack also commended the way the Government handled the situation.
"When we found out the Pullman became an MIQ we obviously weren't involved in that process but to be honest I kind of understand. The Government were making it up as they went along but they had a lot of decisions to make very quickly. I have some sympathy - there's no perfect system," he said.
"No doubt there will have been casualties from that in terms of people that were operating out of hotels who couldn't find other premises, but to me - it was just a difficult time and we're still happy to be around."
MBIE said no businesses were operating directly out of any managed-isolation facilities, although they could continue to operate out of adjoining parts.
It said all managed isolation and quarantine facilities operated under an alert level 4 environment, with strict infection prevention and control protocols in place.
Bo and Edward Viterbo said the door was open to Stamford Plaza's owners to resolve their disagreement through mediation before heading to court in June.
- text by Katie Todd of RNZ