The hotel at the centre of the quarantine confusion over the weekend warns it will have to lay off staff if it can't take in isolating guests in the future.

Auckland's Stamford Plaza was to have taken in isolating guests at the weekend but after residents in a tower at the top of the hotel objected, busloads were instead diverted at the last minute to hotels in Rotorua.

Use of the Stamford was on hold until arrangements were reviewed there, the head of the Government's isolation and quarantining operations Air Commodore Digby Webb said yesterday.

Stamford bosses are fuming at the quarantine deal falling over at the 286-room hotel.

"One of the largest consequences of the hotel not being able to be appointed as an isolated managed facility would include it having no alternative but to retrench its staff. This is something that the hotel had been trying to avoid since the Covid-19 situation arose," said general manager Tarun Abraham.

Details of how many staff were at risk were not disclosed but, since Covid hit, the hotel sector has been ravaged by the absence of international guests and domestic travel restrictions and thousands have lost their jobs.

Abraham said at the weekend that concerns about those in residential parts of the complex mixing with quarantiners were based on false information.

"The hotel and the residences are separate and distinct components. Any common access points between the hotel and the residences will be closed during the applicable period, can be effectively locked to ensure that residents and the intended guest of Stamford are kept separate at all times," he said.

Entrances were clearly separated with no opportunity for the residents and the intended guests of the Stamford to interact, Abraham said.

One resident had raised concerns that they may have to share spaces in the event of an emergency. Abraham said, while Stamford had no intention to be involved in the local politics, he would meet with meet up with the Stamford Residences Body Corporate and others with a view to resolving any misunderstandings in a rational and objective manner.

The lifts leading to the rooms of the Stamford and the residences of the residents are separate. In fact, the entrance to the lifts to the residences are accessed from the street and does not go through the lobby of the Stamford.

The pool and the gym, access of which had been granted to the residents for their use, have been cordoned off, preventing access to these facilities to the intended isolation guests of the Stamford.

"All applicable precautions were taken and the guidelines issued by the Ministry (of Health) were duly followed, ready to welcome the initial guests," said Abraham.

Stamford has incurred substantial cost in the preparations up to now and will suffer substantial consequential losses if the suspension of its appointment is not lifted, Abraham said. The hotel would consider legal action to recover its costs.

He said the hotel had already been affected by the persistent delays to the completion of the City Rail Link before the Covid-19 crisis hit.

The Government has paid out about $7000 per guest to hotels providing 14-day quarantine stays.

Hotel room revenue throughout New Zealand dropped by 84 per cent in April and May, when the sector lost $185 million and thousands of jobs.

The NZ Hotel Owners Association said at the weekend up to 80 per cent of the 10,000 people employed nationwide have lost their jobs.