YHA New Zealand 2018 Annual Report

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2018 annual report

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Exploring Doubtful Sound

Contents Executive Summary


Our Environment


Our Hostels




Our People




Our Guests




Notes to the Summary Financial Statements




Auditor’s Report


Our Community




About YHA New Zealand YHA New Zealand is a leading provider of quality budget accommodation delivered through 38 hostels across New Zealand. We are a membership-based incorporated society and a registered charitable organisation, operating in New Zealand since 1932. Our affiliation with Hostelling International (HI) maintains our status as part of the world’s first and largest budget accommodation network and ensures our members receive reciprocal benefits worldwide. Our mission is delivered through a balance of YHAmanaged hostels and our independently owned Franchise and Associate partners. We give equal consideration to our social, economic and environmental impact. Our Annual Report therefore reflects this triple bottom-line commitment.

Our mission is: To deliver quality budget accommodation and travel experiences which enrich people’s understanding of each other, the environment, and New Zealand.

We are committed to: • Living our values of respect, integrity, passion, and excellence

Focusing on sustainability through our triple bottom line of People, Planet, and Profit

Recognising and respecting the status of Māori in Aotearoa New Zealand

Providing a safe and healthy workplace and hostel experience for all

We seek to operate a profitable and sustainable hostel network that: • Delivers the best possible experience for guests and staff

• •

Makes smart use of technology Shows our commitment to the environment

ISO 14064-1 • certified organisation

Executive Summary Mark Wells, Chief Executive

This has been another challenging but successful year for YHA New Zealand. Particular highlights included completing the refurbishment of YHA Queenstown Lakefront and commencing the build of the new YHA Lake Tekapo hostel, which is expected to open in late 2018. New Zealand tourism continues to flourish at a sector level. International visitor arrivals grew by a further 5% on the previous year to 30 June, while total guest nights in the commercial accommodation sector increased by 3%. However, the backpacker sector showed no increase on the previous year.

Ray Salter, National Chair

The YHA network, including our independent operator partners, hosted close to 700,000 guest nights over the year; 413,000 of these were in YHA-managed hostels. This was a slight decrease on the previous year due to the closure of the previous YHA Lake Tekapo, and temporary or partial closures at each of YHA Queenstown Lakefront, YHA Queenstown Central, and YHA Wanaka for refurbishments. Maintaining this level of occupancy was more than satisfying given our competitive environment and the impact of Airbnb, which is currently delivering 1.5 million guest nights annually in the accommodation sector.














Key metrics for the YHA-managed network, which now consists of thirteen hostels (out of a network total of 38), include:

• • • • •

Bed revenue growth of 2% ($220,000), adjusted to exclude YHA Lake Tekapo Bed yield (average price per sold bed) growth of 2.7% Occupancy levels (adjusted for temporary closures) of over 79% Revenue earned per available unit (REVPAU) growth of 2% Positive cash flow performance

Unfortunately, these efforts did not translate into the budgeted financial result largely due to an overly optimistic revenue budget. This was not achieved for a number of reasons, including a poor ski season, the late re-opening of YHA Queenstown Lakefront, and the reduction in youth arrivals into New Zealand. We are working on projects to create trading improvements in recognition of our significantly increased debt for the Lake Tekapo build. This includes achieving efficiencies as well as the potential for growing revenue. We are committed to positively managing our way through this period until the new hostel opens. We continue to be comfortable with our cash flow performance, which will remain our focus for financial performance over coming years.

Network Changes We maintain strong brand representation across 34 destinations through 38 hostels, but no longer have representation in Kaikoura, Motueka, or Opoutere. The decision to close YHA Opoutere at the end of April 2018 was carefully considered, following an expanded consultation process and an independent report on the state of the property and its maintenance requirements. That process clearly established that maintaining the Opoutere hostel was not sustainable. We still aspire to expand the network to include Mount Maunganui and Dunedin; to date there are a lack of suitable or willing operator partners in these locations. We have invested heavily in refurbishment of our hostels again this year in support of quality standards and feedback from members and guests – a total of $3 million was invested over the course of the year. This included completing the refurbishment of

YHA Queenstown Lakefront, which now joins YHA Auckland City, YHA Rotorua, YHA Wellington, and YHA Christchurch as a Qualmark 5 Star Gold-rated hostel, along with Franchise partner, YHA Nelson by Accents. Construction of the new YHA Lake Tekapo is also advancing well and we remain on target for a late 2018 opening date. The hostel is in a prime location in the village, and includes a public-facing licensed café. Our investment in Lake Tekapo does constrain other hostel investment over the coming period; however, a staged refurbishment of YHA Auckland International is commencing and will restore the hostel to YHA’s presentation standards.

Marketing We operate in an intensely competitive market, with online travel agents (OTAs) continuing to gain market share from YHA generally, and from our direct sales channels in particular. Airbnb continues to grow its presence and impact on the commercial accommodation sector. Nevertheless, we continue to enjoy strong occupancy and high customer satisfaction levels. Our ongoing marketing investment aims to balance the opportunities associated with emerging markets, maintain our traditional markets, and grow business from low-season groups and the education sector. Specific initiatives in the past year have included developing a new website and a digital membership card, both due to launch early in the new financial year, and a continuing groups’ marketing focus.

Our Environmental Commitment YHA New Zealand enjoys an international reputation for our commitment to sustainable tourism, as evidenced by the accolades we have been awarded over the years. We have retained our carboNZeroCertTM certification, achieving a 7% reduction in greenhouse gas emissions. This is largely due to our existing solar installations in Wellington, Franz Josef, and Aoraki Mt Cook which are all performing well, with the Aoraki Mt Cook hostel even returning energy back into the grid. Our next solar installation is planned for the new YHA Lake Tekapo development.

National Office staff celebrate their HI-Q&S certification.

Our Staff As an organisation, we remain fully committed to giving our staff the best possible employee experience, and in turn, our staff ensure that our guests have the best possible experience of YHA and New Zealand. Our annual staff survey again confirmed high levels of staff engagement, as well as an absolute commitment to our values and mission. It is gratifying to lead a hugely committed team who, in many ways, replicate our long-term members’ passion for YHA. We were proud to be recognised this year as the Most Engaged National Association in Hostelling International’s 2018 Awards, and as finalists in two categories at the prestigious 2017 New Zealand Tourism Awards.

In conclusion, we celebrate another positive year for YHA New Zealand, although one that did include its challenges. We continue to set the benchmark for the backpacker sector and enjoy extraordinarily high guest satisfaction levels, which is a reflection of our staff commitment to service excellence and the quality of our hostels. We must continue adapting to our commercial and competitive challenges and opportunities, but in so doing, we remain committed to our long-held values. On that basis, we anticipate a positive and long-term future in which we continue to be more than just a bed to our guests and more than just a job to our staff.

Mark Wells Chief Executive

Ray Salter National Chair

YHA Annual Report 2018


Our Hostels The Hostel Network

Simon Cartwright, Hostel Operations Manager

Our Associate network decreased by two hostels during the course of the year. YHA Motueka, The Laughing Kiwi withdrew for business reasons, and YHA Kaikoura, The Lazy Shag due to ongoing uncertainty resulting from the 2016 earthquake. We also initiated the closure of YHA Lake Tekapo to guests for use as contractor accommodation during the new hostel build, and closed YHA Opoutere permanently at the end of April 2018. YHA Queenstown Lakefront reopened in August 2017 following the final stage of refurbishment. The property has subsequently been upgraded to a 5 Star Qualmark rating and is consistently rated in the top three Queenstown hostels at over 90% on the ReviewPro guest rating system, reflecting the success of the refurbishment. This year we successfully renegotiated the YHA Christchurch, Rolleston House lease which allows us to keep this historic hostel in our network until 2048. The YHA hostel network now comprises 13 YHA-managed hostels, 21 Associate partners, and 4 Franchise partners, bringing the network to a total of 38 hostels.



YHA-managed Hostels

Associate Partners North Island

South Island

North Island

YHA Ahipara Backpackers & Holiday Park

YHA Arthur’s Pass, Mountain House

YHA Bay of Islands, The Rock Adventure Cruise

YHA Glenorchy, Kinloch Lodge

YHA Gisborne

YHA Golden Bay, Annie’s Nirvana Lodge

YHA Auckland City YHA Auckland International YHA Rotorua YHA Wellington



South Island YHA Christchurch YHA Christchurch, Rolleston House YHA Franz Josef YHA Lake Tekapo




YHA Ohakune, Station Lodge YHA Raglan, Solscape Eco Retreat

YHA Hokitika, Birdsong Backpackers YHA Oamaru, Red Kettle YHA Picton, The Villa YHA Punakaiki, Te Nikau Retreat

YHA Whanganui, Braemar House

YHA Springfield, Smylies Accommodation

YHA Whangarei Falls Holiday Park

YHA Westport, TripInn

YHA Wanaka

Franchise Partners

YHA Whitianga, On the Beach Backpackers

YHA Queenstown Central YHA Queenstown Lakefront YHA Te Anau

North Island


YHA New Plymouth, Sunflower Lodge

YHA Hanmer Springs, Kakapo Lodge

YHA Waitomo, Juno Hall

YHA Aoraki Mt Cook


YHA National Park Backpackers

YHA Bay of Islands, Paihia YHA Napier YHA Taupo, Finlay Jacks

South Island YHA Nelson By Accents

“The remarkably high audit results confirm the strong commitment of the people who form the YHA New Zealand network, showing excellent creativity and initiative in delivering their mission every day. Together with HI Luxembourg, YHA New Zealand has taken the lead in being the first National Office to get certified for their Sustainability actions. They are a trusted partner to HI as a whole, and truly contribute through their strategies.” Sigríður Ólafsdóttir YHA Wanaka modernisation

Hostel Development Construction of the new YHA Lake Tekapo began in 2017 and is expected to open in late 2018. This new 130bed property will offer uninterrupted panoramic views across Lake Tekapo. It will feature YHA New Zealand’s first licensed café and comes complete with solar power and hot water systems to minimise our impact on the environment. We also undertook the following refurbishments and upgrades:

Refurbishment of a further seven ensuite bathrooms at YHA Queenstown Central

• •

Modernisation of all five 6 bed units at YHA Wanaka

Upgrade to hot water heat pumps at YHA Auckland International, reducing gas usage and subsequent emissions

Refurbishment of YHA Rotorua’s main kitchen including a purpose-built recycling station

Repairs to elevator and emergency evacuation egress at YHA Auckland City

competitors, with only two hostels outside the top five hostels in their area, and six of our hostels rating in the top three. Many of our hostels received TripAdvisor Certificates of Excellence for 2017 and 2018, reinforcing these high guest satisfaction levels. A Qualmark review of our hostel management systems resulted in all YHA-managed hostels achieving Gold Sustainable Tourism Business status; these hostels and our National Office have all retained carboNZeroCertTM certifications. Our biennial HI-Q&S audit was carried out by Sigríður Ólafsdóttir, Chief Operations Officer of Hostelling International, in November 2017. Level 2 status was confirmed for our National Office, YHA Auckland International, YHA Auckland City, YHA Rotorua, YHA Wellington, YHA Franz Josef, YHA Queenstown Central, YHA Queenstown Lakefront, and YHA Christchurch. Level 1 status was confirmed for all other YHA-managed hostels.

Looking Forward Quality Guest satisfaction levels remain high. Guests rated our network at a pleasing 86% for overall satisfaction on our Get Smart survey system; all twelve operational YHAmanaged hostels rated between 80.1% - 90.2% on the ReviewPro guest rating system. YHA-managed hostels continue to rate strongly in comparison to their local

YHA Queenstown Central ensuite

Completion of YHA Lake Tekapo in late 2018 limits the extent of capital projects that can be completed in the forthcoming year; however, a staged refurbishment of YHA Auckland International will commence in July 2018. It is also necessary to stabilise the earth bank behind YHA Queenstown Lakefront, which will commence in September 2018.

YHA Rotorua’s kitchen refurbishment

YHA Annual Report 2018


Our People This year we redesigned our Organisational Development plan with a focus on leadership, people and culture, and learning and development. Maureen McCloy, Corporate Services Manager

Leadership We took a number of actions designed to support our leaders and managers this year. These included:

Refurbishing our Intranet to improve delivery of resources, information, and communication

Enhancing video-conferencing capabilities to enable more effective and personable support

Engaging an HR Co-ordinator to provide a high level of support in recruitment, immigration, health and safety, and more

Bringing our ICT helpdesk in-house, resulting in significantly improved satisfaction levels surrounding technology support

Supporting our up-and-coming leaders through our partnership with Service-IQ

People and Culture Staff Composition We employed a total of 153 people as at 30 June 2018 with a full time equivalency of 116. We worked a total of 266,611 hours during the year, which is an increase of 1,348 hours due to temporary closures at YHA Queenstown Lakefront and YHA Auckland City in the previous year.

A Snapshot of Our People, 30 June 2018 GENDER BREAKDOWN



• Hostels: 75% 63 staff

(83 staff)

90 staff

• National Office: 25% (27 staff)

• Hostels: 80% (123 staff)




• National Office: 20% (30 staff)


Fixed Term / Casual

• Hostels: 93% (40 staff)


• National Office: 7% (3 staff)

• Hostels: 79% (92 staff)

• National Office: 21% (24 staff) 8

Brendon, Karla, and Brian with their Long Service Awards Kate Ufton celebrates 20 years

Permanent staff turnover for the year was 27%. This is an annualised figure calculated using permanent staff departures against our average head count over the 12-month period. 59% of all staff are female and 41% are male. 79% of all staff work in hostels. The 27 different nationalities represented reflect the international nature of our business. New Zealanders comprise 47% of staff with the next three nationalities being British (14%), Indian (4%), and German (4%).

Long Service We celebrate success by thanking and congratulating our team members who reached a significant milestone during the year. Each has made a significant contribution to YHA. 25 years

Helen Bell, YHA Wanaka

20 years

Chris Sperring, YHA Wellington Kate Ufton, National Office

10 years

Karla Barrow, National Office Jeffrey Birmingham, YHA Franz Josef Maureen McCloy, National Office

5 years

Erin Hornsby, YHA Auckland Brendon Norrie, National Office Jane Presto, YHA Wanaka Paula Slack, YHA Auckland Brian Westwood, National Office Rik Winter, YHA Wellington

Employee Engagement Staff engagement, as reported in our annual Staff Survey, continues to lift each year. We are proud that our results over time illustrate a shift from a largely ambivalent workforce to one that is engaged. Our team members are emotionally connected to YHA, and genuinely care about our work and YHA’s success.

Staff at YHA Wanaka celebrate Helen Bell’s 25th anniversary



• Engaged


• Ambivalent


• Disengaged

What do you like most about working at YHA? “The fun work environment, guest interaction, and the stunning location”

“The sense of community between staff members”

“The team I work with and the flexible and rewarding work” Staff Survey Responses

ISO 14064-1 • certified organisation

YHA Annual Report 2018


Staff at the YHA New Zealand 2017 Network Conference in Wellington

Staff Wellness During the year we undertook a review of our pay rates to ensure gender equity and again committed to a YHA minimum wage which is above the legislated minimum wage. A number of our staff participated in the Global Challenge this year, each aiming to walk 10,000 daily steps for 100 days. We sponsored this challenge as a means of improving physical and mental wellbeing among the five teams who entered. Over the course of the challenge, participants achieved:

• • • •











A combined total of 48,713,620 steps or 31,177km 76% exceeded 10,000 steps per day 75% reported concentrating better and feeling more productive 69% reported feeling less stressed

Learning and Development We continue to gain momentum with our learning and development pathway. Through our partnership with Service-IQ, we have a group of enthusiastic staff working towards Certificates in Tourism, a Level 3 NZQA accredited qualification. We look forward to the celebration with our graduates! This year we introduced a digital record of learning, which our managers and staff can both view. This records staff progress through our learning and development pathway, additional learning they undertake, and can remind staff and managers when further training is due.

Health and Safety Our health and safety plan focuses on three key areas: Leadership, People Engagement, and Risk Management. We’ve adjusted our management system to align with these areas. During the year we redesigned our reporting systems so that all incidents, accidents, near misses, and hazards are reported via one channel. This is much easier for staff to complete and enables clearer insight into trends. It also supports the identification of our key risk areas which is a core component to improving health and safety outcomes for all workplaces in Aotearoa. We’ve continued to build our culture of talking positively about health and safety among all levels of staff. This helps to create a positive workplace culture and therefore a safe work environment.

Clockwise from left: Staff meeting at YHA Wanaka, the new YHA Lake Tekapo under construction, YHA Auckland International staff dress up for Halloween, guests at YHA Christchurch, YHA Queenstown Lakefront guests enjoying the view and browsing for activities

YHA Annual Report 2018



Our Guests Understanding Our Guests This year we refreshed our understanding of our guests, their motivations for travel, and the changing buyer behavior of our next generation, ‘Generation Z’, of travellers. Brian Westwood, Marketing and Sales Manager

Customer Journey research and a combined Generation Z research project with HI USA, HI Canada, and YHA Australia took place alongside continual revision of guest reviews across the top ten review sites. Research tells us we do exceptionally well satisfying existing customer needs, with consistently high quality standards. Our friendly, welcoming staff are a significant point of difference our guests comment on frequently. The next generation of travellers are more socially and environmentally conscious which reinforces our recent investments in carboNZeroCertTM certification and renewable energy sources.

Guest Experience Our digital platforms required investment to ensure we meet the high expectations of this generation of digital natives. A responsive, fast, user-friendly booking platform due for launch in July 2018 will keep us in touch with large scale online travel agencies like Booking.com and Hostelworld. Moving from a plastic membership card to a digital format has also been part of this year’s re-engineering of our marketing systems. The competitive environment remains intense, with Airbnb dominating the landscape in terms of brand awareness and anticipated usage among large segments of our target markets. Investments in hostels by competing brands such as Jucy Snooze, Haka Lodge, and hotel brands moving into the shared accommodation space puts increasing pressure on customer expectations as well as broadening market supply. Online travel agencies are growing in strength and continue to take market share of our direct sales. We continue to balance the positive distribution benefits with the risk of over-representation of these channels in our sales mix. This is a complex process which is managed well by both National Office staff and Hostel Managers.

Our Current Guests Despite these external pressures we continue to have a strong market presence with high customer satisfaction levels and strong occupancy. We have a good balance of source markets across Asia, North America, and Europe. Our group business continues to grow following successful marketing campaigns focused on this segment. We were recognised as finalists in the prestigious New Zealand Tourism Awards in 2017 for our marketing efforts towards New Zealand-based groups, as well as for our environmental efforts. Our domestic numbers have fallen slightly, due to a particularly poor winter season and hostels which are predominantly used by domestic guests being closed for refurbishment. 2018 has been a year of revision and building our marketing infrastructure, to enable us to compete more effectively in an increasingly competitive environment.


Where Our Guests Come From North America

United Kingdom






Overseas Groups





South America




New Zealand

NZ Groups



Membership Overall membership numbers have fallen during 2018. We continue to battle the growth of online travel agencies and a market trend that links membership to immediate benefits through savings on accommodation costs. This year we focused on growing youth membership numbers through sponsorship of the youth leadership event Festival for the Future and increased profile in universities. This promotes awareness among young people of our membership and hostels, and supports our founding objects. Our primary communication format with our members and subscribers, YHA HorizoNZ email newsletter, continues to perform strongly against average industry open and click-through rates. This newsletter provides travel tips and inspiration to subscribers interested in ongoing travel around New Zealand and with other Hostelling International Associations. Considerable work has been undertaken to develop an improved membership product with increased benefits, due for release in August 2018 in a digital card format. Moving to a digital membership card means we expect to produce 10,000 less plastic cards annually, with a significant reduction in printing and distribution costs. It is also a market expectation that memberships are delivered in a digital format as opposed to plastic cards.

Members as at 30 June 2018 International























ISO 14064-1 • certiďŹ ed organisation

YHA Annual Report 2018


Governance National Board

Maureen McCloy, National Secretary

Our organisation is governed by a National Board, which comprises six elected senior financial members and up to two co-opted members. The Board’s role is to act in the best interests of YHA as a whole in order to deliver on our aims and objects and ensure our long-term sustainability. The Board works hard to maintain a diverse base of skills given the interesting and challenging mix between the organisation’s commercial imperatives and our not-forprofit charitable aims and objects. Board Members receive no remuneration but are entitled to claim reasonable and actual expenses. The Board has three sub-committees: Remuneration, Audit and Risk, and Awards. The Board is committed to good governance and aligns its processes with the Institute of Directors’ best practice guides. It meets at least six times each year, and maintains its link to the day-to-day leadership and management of YHA through a close working relationship with the Chief Executive.

Board Members Ray Salter (National Chair) Kevin Brewer (Deputy Chair and Convenor, Audit and Risk Committee) Darren Burden Ken Griffin (from October 2017) Jaya Prasannan Michael Sheehan Hayley Tribble Nancy Ward (from May 2018) During the year two National Board members were farewelled: John Hammond (to September 2017) as remembered below, and Steve Wakefield (to October 2017). We thank Steve for his passion for helping young people develop, and the strength he brought to the Board’s considerations via his finance and auditing, risk management, and corporate governance skills and experience.

Remembering John Hammond John Hammond, the immediate past Chair of our National Board, passed away on 19 March 2018. John was elected to the Board in October 2010, and elected Chair in October 2014. He retained this position until September 2017, when he stepped down due to ill health. John wholly supported YHA’s aims and objects, and our legacy and values resonated strongly for him. He enjoyed his leadership role as Chair, and was particularly passionate about investing in hostel upgrades in order to offer our members and guests a quality hostel experience. He was an especially strong advocate for the current Tekapo development, and stayed in touch with construction progress up until his passing. John was highly valued for the range of experiences he brought to the governance of YHA. His energy, wisdom, and boundless enthusiasm were qualities that endeared him to Board colleagues and staff. We miss John and his passion for YHA and life generally.


2017 Annual General Meeting in Wellington

Gordon Solloway accepts Avis Robertson’s award from Board Member Hayley Tribble.

Member Engagement

All Senior Financial Members are, upon eight or more weeks’ current membership, entitled to vote in all YHA elections and on Constitutional Notices of Motion. Members are encouraged to participate in the AGM in order to gain insight into our strategic direction and performance; more information about the AGM and previous outcomes is available on our website. In 2017, 9000 members were registered on the electoral roll; 1050 cast votes. Our AGM was attended by 68 members.

One of our ongoing challenges is to engage our large membership base with matters of governance. We communicate with subscribers of our email newsletter YHA News about Board activities and governance matters, assist branches and member groups in distributing their own email newsletters, hold regular meetings with members over morning tea or lunch, and this year have fulfilled members’ requests for a two-way communication channel via the establishment of a social media forum. Members can join or form local Branches or Member Groups. There are currently two Branches: Whangarei and Auckland – each with a core of 10-15 members involved in local Branch activities. There are also three Member Groups: Christchurch, Hawke’s Bay, and Opoutere – each of these being a less formal network of interested members.

Service and Merit Awards A Distinguished Service Award was presented at the 2017 AGM to Avis Robertson for her exceptional voluntary contribution to the Association as a long standing membership secretary for the previous Wellington Branch.

Left to right: Ray Salter, Nancy Ward, Michael Sheehan, Jaya Prasannan, Ken Griffin, Hayley Tribble, Kevin Brewer. Inset: Darren Burden

YHA Annual Report 2018


Our Community We’re committed to being part of a vibrant and active social community beyond our hostel network. At its heart, YHA is a gateway to new experiences, new friendships, and new understanding.

Cora Wilding Memorial Award The Cora Wilding Memorial Award is about helping young people reach their goals. Our founding mission was to motivate and inspire young people to pursue personal development by exploring New Zealand and the outdoors. The Award reinforces that mission, having been established over twenty years ago to perpetuate the memory of our founder, Cora Wilding. The value of the Award has increased to a subsidy of up to $5,000. This supports participation in a personal development training course or project that will benefit the awardee as well as their local community. Awardees also receive a one-year YHA membership. This year’s Award had two recipients; Gemma Black and Joanna Tao. Gemma attended Outward Bound’s 21-day Mind, Body & Soul course as part of her Duke of Edinburgh Gold residential project. “During the course I learnt a great deal about myself, and also the other members of my [team]. I learnt how crucial teamwork is and that to get a job done, everybody in the team must be a leader in their own way,” she reported following her trip. Joanna was chosen to represent New Zealand through the Aotearoa Youth Leadership Institution. She will attend the United Nation’s Climate Change Conference in December 2018.

Community Projects Every hostel has a local community project. This year some of our projects included: YHA Auckland staff completed tree planting and nursery work on Motutapu Island in the Hauraki Gulf, and beach clean ups through the environmental charity Sustainable Coastlines. This was the twentieth year of YHA Wellington’s primary community project, hosting students from Victoria University studying a Bachelor of Tourism. The students visit and learn about the hostel’s sustainability features; following their visit they design their own tourism accommodation for a chance to win sponsored prizes from YHA. This relationship engages students with our industry and sustainability initiatives, and also leads to successful employment relationships. YHA Wellington is passionate about minimising waste and encouraging recycling; the hostel supports several community groups through initiatives such as the Kaibosh food recovery service, Salvation Army, St Vincent de Paul, and Samoan Church. This year saw their eighth year of sponsorship for five children from disadvantaged backgrounds to attend the Children’s Christmas Party. Staff also participated in a volunteering day out at Zealandia Eco Sanctuary, clearing invasive plant species. The YHA team in Queenstown sponsored and volunteered in a number of community events and clean-up days, including WinterFest, events for Autism NZ and HeartKids, Clean Up New Zealand day, Sea Shepherd beach clean-ups, and more. They have also adopted a plot of land on the Ben Lomond Track, which sees staff removing invasive plant species and assisting in maintenance. Throughout the year, YHA Christchurch supported initiatives such as Keep New Zealand Beautiful, the City Mission, Returned Services Association, Cancer Society, and more. Hostel staff and team members from YHA’s National Office also volunteered their time to plant native trees funded by the Green Footprint Project.


YHA Lake Tekapo supported the Lake Tekapo School by using the closed hostel building to host builders working on a new swimming pool. This saved the school a great amount of money and allowed students to progress in their swimming development.

YHA Ohakune support the Ohakune Zero Waste campaign, and contribute to a local community Advisory group

YHA Lake Tekapo manager, Billy Kerr, volunteers as Chair of the Lake Tekapo Regional Park Community Board and participated in Clean Up New Zealand week

Other community contributions included:

YHA Waitomo assist in pest and stream maintenance at a local DOC site

Staff at YHA Auckland volunteered for DOC and at the Rotuman Language Week festival

YHA Aoraki Mt Cook supported their local Banff Film Festival showing

YHA Hokitika assisted with community events such as the Hokitika Lantern Parade

Staff at YHA Te Anau volunteered at extreme endurance race event, GodZone

Staff at YHA Aoraki Mt Cook participate in the Community Hall Board and volunteer for St John

Many of our hostels also support Hostelling International’s Sleep For Peace initiative, designed to promote peace through the relationship-building and understanding that comes with international travel.

YHA Annual Report 2018


Our Environment We trace our commitment to the environment back to our origins in the early 1930s. Our first objects, set out in the 1933 Handbook, were “To help all, but especially young people, to a greater knowledge, care and love of our land; to promote good-fellowship between trampers of all classes.” Eighty-five years later the way we talk about the environment has evolved, but our core commitment remains. As we’ve grown from an association of tramping clubs to an organisation with international reach, our environmental effort has progressed from local to global. Our research tells us that care for the environment is still important to youth travellers today. Not only do they appreciate our sustainability initiatives, they expect them!

carboNZeroCertTM Certification We continue to measure, reduce, and offset our greenhouse gas emissions as part of our carboNZeroCertTM certification, administered by Enviro-Mark Solutions Ltd. We support Hinewai Reserve on Banks Peninsula as our local provider of carbon credits.

YHA’s Carbon Emissions 2016/17













We’ve achieved a 7% reduction in total emissions from the previous year, down to 851 tCO2e. Some of our biggest emissions reductions came from the installation of solar reticulation systems into YHA Aoraki Mt Cook and upgrades at YHA Auckland International, undertaken by our Property team. The reduction in our electricity usage means our corresponding emissions reduced to 300 tCO2e. Across the YHA-managed network, our emissions intensity is 2kg CO2e per bednight.

Solar Installations Solar installations at YHA Wellington and YHA Franz Josef continue to perform well. Over two years, the system installed at YHA Wellington has generated 78.9MWh solar energy, resulting in carbon reductions of 24.1 tonnes. We’ve made system savings of $42,000 for combined Heating, Lighting, and Power (HLP). In a similar time period, the system at YHA Franz Josef has generated 218MWh solar energy, resulting in carbon reductions of 14.5 tonnes and system savings of $77,000. Over its first year of operation, the solar installation at YHA Aoraki Mt Cook generated 41.4MWh solar energy, resulting in carbon reductions of 5.78 tonnes and system savings of $11,000.


Hinewai Reserve on Banks Peninsula

Solar panels at YHA Aoraki Mt Cook

Green Footprint Project This ongoing initiative enables our guests to reduce their impact on the environment by contributing to the purchase of native flora. These are planted by our team in either Canterbury or Wellington. In 2017, Christchurch-based staff and guests, along with local community groups and schools, planted 680 trees at a new planting site at Timber Yard Point on the south side of Lake Ellesmere. It was a typical nor’west Canterbury day so the team spent the day leaning into the wind as well as their shovels!

Remembering Roy Pyle In the past year we lost one of our strongest advocates for environmental sustainability. Roy contributed over 22 years of service to YHA’s governance, including serving twice on the National Board. He was awarded Honorary Life Membership in 1990. We especially remember the satisfaction Roy expressed prior to his passing about our commitment to environmental sustainability and triple bottom-line reporting, given his involvement in their initiation. Roy was passionate about kauri restoration; we requested that five seedling kauri be planted in his name at the Kauri 2000 Trust on the Coromandel Peninsula.

Other Celebrations In 2017, Qualmark changed the way they communicate their awards, now naming them Sustainable Tourism Business Awards. We’re delighted that of the fifteen backpackers awarded Gold status, fourteen are YHA hostels. This year we were finalists in two categories at the prestigious New Zealand Tourism Awards, including the Environmental Tourism Award which recognises environmentally sustainable tourism businesses. While YHA hostels have been smoke-free inside for some years, we were also happy to extend this to all external areas in August 2017. We contributed to Year of Sustainable Tourism initiatives by Hostelling International through sharing our knowledge and best practices around carboNZeroCertTM certification in particular, to encourage and empower other National Associations to follow suit. We were also runners-up for Hostelling International’s Sustainable Tourism Award.

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YHA Annual Report 2018


International YHA New Zealand continues to be an active and contributing member of Hostelling International (HI), the trading name of the International Youth Hostelling Federation (IYHF). This is a strategically important membership and achieves a key competitive advantage. We continue to foster our international presence and relationships through the following: PacRim Marketing Collaboration Projects to date include jointly-funded European research, a marketing campaign targeting long-haul travellers, improved collaboration to cross-promote destinations, collaboration in developing digital business systems, and improved sharing of business intelligence. HI Marketing Forum, Lisbon, February 2018 This was attended by delegates from 22 countries including Marketing and Sales Manager, Brian Westwood. The four-day forum included updates and discussions on sustainability practices and marketing collaboration opportunities. This was a valuable opportunity to liaise in person with colleagues from our major international markets including USA, UK, Germany, France, and Canada. HI Asia Pacific Marketing Forum, Sydney, June 2018 This was attended by delegates from eight countries including four staff from YHA New Zealand, and representatives from Hostelling International. The two-day forum was marked by productive discussion and relationship-building that will facilitate understanding and further collaboration between Asia Pacific National Associations. Hosting HI Staff Following the Asia Pacific Marketing forum, Brianda Lopez (Head of Programmes Standards and Sustainability) and Lisa Tanaka (Engagement Executive – Asia Pacific Region) took the opportunity to experience our hostels in person and were very impressed with the network. They provided very positive feedback on their experience to our National Board and to the wider international network. YHA Australia Relationship YHA New Zealand and YHA Australia continue to enjoy a close collaborative working relationship at both management and operational levels. This includes structured meetings among senior management as well as staff participation in each country’s key meetings. HI General Participation YHA New Zealand continues to contribute positively to HI at a general level. Specifically, Chief Executive, Mark Wells, facilitated the HI Governance Review project which had a successful outcome, while Brian Westwood remains an active participant in HI Membership and Marketing matters. These contributions were recognised through Hostelling International’s 2018 Awards, in which YHA New Zealand was named HI’s Most Engaged National Association.



Clockwise from top: YHA Wanaka, YHA Rotorua staff with HI-Q certificate, YHA Aoraki Mt Cook solar panels, Sydney Asia Pacific Marketing Forum, HI staff visit YHA's National Office, HI Chicago, YHA Auckland City

YHA Annual Report 2018


Our Financials Youth Hostels Association of New Zealand Inc SUMMARY STATEMENT OF COMPREHENSIVE REVENUE AND EXPENSE FOR YEAR ENDED 30 JUNE 2018 2018 $ 000s

2017 $ 000s

















Net Surplus/(Deficit) before Financing Costs Interest Received Interest Paid Surplus/(Deficit) after Financing Costs Gain/(Loss) on Sale of Assets Gain/(Loss) on Revaluation of Investment Property (Impairment) of Goodwill











2018 $ 000s

2017 $ 000s




Movement in Net Assets for the Year



Balance at Start of the Year







2018 $ 000s

2017 $ 000s

Accumulated Funds



Revaluation Reserve










These were represented by: 2018 $ 000s

2017 $ 000s

Current Assets



Long-term Lease paid in advance








Mortgage Receivable Assets Classified as Held for Sale Investment Property



Property Plant & Equipment









Term Liabilities









Intangible Assets TOTAL ASSETS

LESS LIABILITIES Current Liabilities

On Behalf of the National Board

Ray Salter – National Chair

Kevin Brewer — Convenor, Audit and Risk Committee


FOR THE YEAR ENDED 30 JUNE 2018 2018 $ 000s

2017 $ 000s



Net Cashflows From Investing Activities



Net Cashflows From Financing Activities






Add Opening Cash Balance





Net Cashflows From Operating Activities








YHA Annual Report 2018


Notes to the Summary Financial Statements For the year ended 30 June 2018

Kevin Cameron, Finance Manager

These are the Summary Financial Statements of the Youth Hostels Association of New Zealand Incorporated (YHA) for the year ending 30 June 2018. YHA is a public benefit entity, incorporated under the Incorporated Societies Act 1908, and a registered charitable entity under the Charities Act 2005. The specific disclosures included in these summary financial statements have been extracted from the full annual financial statements authorised for issue on 17 September 2018.

Basis of preparation These summary financial statements comply with PBE FRS43: Summary Financial Statements. The presentation currency is New Zealand dollars, rounded to the nearest thousand dollars. They do not include all the disclosures provided in the full financial statements and cannot be expected to provide as complete an understanding as the full financial statements. All specific accounting policies have been applied on the same basis as those used in YHA’s full financial statements. The full financial statements have been prepared in accordance with the Charities Act 2005, the generally accepted accounting practice in New Zealand (NZ GAAP), the Financial Reporting Act 2013, and Tier 2 Public Benefit Entity Standards. Reduced disclosure concessions have been applied. There have been no events subsequent to balance date which materially affect the result for the year.

Material uncertainty on going concern During the year YHA renegotiated its banking arrangement as part of funding the new YHA Lake Tekapo development and transitioned to a performance rather than asset-based covenant. In preparing the financial statements on a going concern basis the Board has reviewed forecasts for the next 12 months, including forecast covenant compliance, and considered achievability of the assumptions underlying the forecasts. The forecasts indicate a breach in covenants during Q1 FY19, and meeting covenants from Q2 onwards. YHA has taken immediate steps to reduce expenditure, market the investment property to reduce debt and perform a review of our business model. BNZ has confirmed continuation of the banking facilities, subject to a review in November 2018 to determine if satisfactory progress has been achieved to enable covenant compliance by Q2 or Q3 FY19. The Board recognise material uncertainties exist in relation to forecast performance including achieving forecast revenue due to current market conditions across the sector, the timing of completing and opening the new YHA Lake Tekapo, the timing and amount received from the sale of the investment property and the consequent ability to meet the Association’s obligations, including covenants under its banking agreement. These may cast significant doubt on YHA’s ability to continue as a going concern. The Board has concluded that it is appropriate to continue to prepare these financial statements on a going concern basis because:

They believe forecast trading revenue assumptions are reasonable, having regard to recent performance;

• •

The investment property has been put to market subsequent to year-end;

BNZ’s confirmation of continuation of the Association’s bank facilities. Should BNZ’s review in November 2018 not be fully satisfactory, YHA will need to renegotiate its banking facilities or secure alternative funding.

Forecast costs are reasonable, reflecting cost-saving measures that are being implemented. YHA also retains flexibility to further reduce its cost base;

These financial statements do not include any adjustments that may be required should YHA be unable to continue as a going concern and realise the value of assets and discharge liabilities in the normal course of business.

Audit opinion An unqualified audit opinion has been received on both the full and summary financial statements for the year ended 30 June 2018. Copies of these are available; please phone (03) 379 9970 or email national.secretary@yha.co.nz. These summary financial statements have been examined by auditors for consistency with the full financial statements. These were approved for issue by National Board on 17 September 2018.


Auditor’s Report Report of the independent auditor on the summary financial statements Report of the Independent Auditors on the Summary Financial Statements

To the members of Youth Hostels Association of New Zealand Inc. The summary comprise: to the membersfinancial of Youth statements Hostels Association of New Zealand Inc.

summary statement of financial position as at 30 June 2018; • Thetheaccompanying summary financial statements, on pages 14 to 16 which comprise the summary statement financial position as at 30 June 2016, the summary statement comprehensive and ended; expenses, the summary statement of comprehensive revenue and of expenses for therevenue year then • ofthe statement of changes in net assets and the summary cash flow statement for the year then ended, the summary statement of changes in net assets for the year then ended; • summary and related notes, are derived from the audited financial statements of Youth Hostels Association of New the summary statement of30 cash flows Inc. for the year ended June 2016.for the year then ended; and • Zealand to thefinancial summary financial summary statements do statements. not contain all the disclosures required for full financial statements • Thenotes under New Zealand Equivalents to International Financial Reporting Standards. Reading the summary

financial statements, therefore, is not a substitute for reading the audited financial statements of Youth Our opinion Hostels Association of New Zealand Inc.

The summary financial statements are derived from the audited financial statements of Youth Hostels Association of New Zealand Inc. the financial statements forOur theaudit yearofended 30 June 2018. for the year ended 30 June 2016 was completed on 16 August 2016 and our unmodified opinion was issued on that date. We have not undertaken any additional audit procedures in

Inrelation our opinion, accompanying financial statements in all material respects, with the audited financial to thosethe financial statementssummary from the date of the completion ofare our consistent, audit and those financial statements and the summarywith financial do not reflect the effects of events that occurred statements, in accordance PBE statements FRS-43: Summary Financial Statements issued by the New Zealand Accounting Standards Board. subsequent to the date of our report on those financial statements.

This report is made solely to the Association’s members, as a body. Our work has been undertaken so that we

Summary financial might state those matters westatements are required to state to them in a report from the auditor and for no other

purpose. To thefinancial fullest extent permitted law, we do not or assume responsibility anyone other Entity Standards Reduced Disclosure The summary statements dobynot contain allaccept the disclosures required by to Public Benefit than the(PBE Association’s members,the as asummary body, for this report,statements or for the opinions weauditor’s have formed. In addition, Regime RDR). Reading financial and the report thereon, therefore, is not a substitute for we take no responsibility for, nor do we report on, any part of the annual report not specifically mentioned in reading the audited financial statements and the auditor’s report thereon. The summary financial statements and the audited financial our report. statements do not reflect the effects of events that occurred subsequent to the date of our report on the audited financial statements. Directors’ Responsibility for the Summary Financial Statements The Directors are responsible on behalf of the Company for the preparation of the summary financial statements in accordance withstatements FRS-43: Summary Financial Statements (FRS 43). The audited financial and our report thereon

Auditors’ Responsibility We expressed an unmodified audit opinion on the audited financial statements in our report dated 17 September 2018. Our responsibility is to express an opinion on the summary financial statements based on our procedures,

That report includes a Material Uncertainty Related to on Going Concern which were also conducted in accordance with International Standard Auditing (New section Zealand)that 810:draws attention to Note 1 of the audited Engagements to Report on Summary Financial statements Statements. have been prepared on a going concern basis which is dependent on the financial statements. The audited financial We are of thetoassociation. firm carries out other services the association in the area its obligations, including banking ability ofindependent the Association achieve itsOur forecasted performance and thefor consequent ability to meet of treasuryUncertainties advice. The provision these other services has not impaired independence. covenants. exist inof relation to the Association’s forecast our performance including forecast revenue due to current market Opinion the timing of completing and opening the new YHA Lake Tekapo hostel and the timing and amount received from the conditions, In our opinion, the summary financial statements on pages 14with to 16 other derived from theasaudited financial sale of the investment property. These conditions along matters described in Note 1 of the audited financial statements statements of Youth Hostels Association of New Zealand Inc. for the year ended 30 June 2016 are consistent, indicate the existence a material uncertainty that may cast significant doubt about the Association’s ability to continue as a going in all material respects,of with those audited financial statements, in accordance with FRS-43. concern. These matters are addressed in the notes to the summary financial statements. Restriction on Use of our Report This report has been prepared for inclusion in the annual report. We disclaim any responsibility for reliance

Responsibilities of theincluded National for the summary financial on this report or the amounts in the Board summary members financial statements, for any purpose other than that statements

for National which theyBoard were prepared. The members are responsible, on behalf of the Association, for the preparation of the summary financial statements in accordance with PBE FRS-43: Summary Financial Statements.

Auditor’s responsibility Chartered Accountants


16 August 2016 Our responsibility is to express an opinion on whether the summary financial statements are consistent, in all material respects, with the audited financial statements based on our procedures, which were conducted in accordance with International Standard on Auditing (New Zealand) 810 (Revised), Engagements to Report on Summary Financial Statements. PricewaterhouseCoopers We are independent of the Association. Our firm carries out other services for the Association in the areas of treasury advice. The 5 Sir Gil Simpson Drive, Canterbury Technology Park, PO Box 13244, Christchurch 8053, New Zealand provision of 3000, theseF:other not impaired our independence as auditor of the Association. T: +64 3 374 +64 3services 374 3001, has pwc.co.nz

Who we report to This report is made solely to the members, as a body. Our audit work has been undertaken so that we might state those matters which we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Association and the members as a body, for our audit work, for this report or for the opinions we have formed.

Chartered Accountants 17 September 2018


PricewaterhouseCoopers PwC Centre, Level 4, 60 Cashel Street, Christchurch Central, PO Box 13244, Christchurch 8141, New Zealand

T: +64 3 374 3000, F: +64 3 374 3001, pwc.co.nz

YHA Annual Report 2018


Acknowledgements Bequests

Honorary Vice-Presidents

We express our heartfelt appreciation to those who have left us a gift in their will. Thank you for helping to ensure we can continue to deliver on our charitable aims and objects for generations to come.

David Berry Bruce Ward Harry Guitry (to October 2017)

The estate of Gordon Edgar Roberts provided $1,000 this year.

Honorary Life Members 1967

Gordon Solloway


Jim McKie


Jean Nelson


Peggy Jack Donald Paterson


Rodney Metcalfe


Gwyn Rogers Ruth Wildish



Roy Pyle (passed away March 2018)

YHA is very grateful for the following donations of $1,000 and over.


Peter Bugler


Bill Morris Malcolm Wade


Mike Northmore Gilbert Whalley


Bruce Bertram Moira Lipyeat

The Eric Gordon Harvey Trust provided $6,198. In line with the trust deed this is to be used for the benefit of hostels in the South Island, so this year’s amount has been applied to the installation of solar panels at YHA Lake Tekapo.

Green Footprint


To assist in the development of YHA Lake Tekapo: Dennis Viehland


Anonymous Donor



Charlie Smith

Gwyn Rogers



Ross Butler Lance Kiddey Ben Mitchell John Wilson


Harry Guitry


Bruce Ward


David Berry Amanda Gower


Coral Laughton Clive Croy

Our Structure We are a registered charitable organisation and an incorporated society. Our Charities Services Registration Number is CC37649. YHA New Zealand’s registered office is at Level 1, 166 Moorhouse Ave, Christchurch 8011. Bank: Bank of New Zealand Auditors: PricewaterhouseCoopers Solicitors: Rhodes & Co, Young Hunter


dream explore connect

Kayaking in Abel Tasman National Park

Youth Hostels Association of New Zealand Inc. Level 1, 166 Moorhouse Avenue, PO Box 436, Christchurch 8140, New Zealand ph: +64 3 379 9970 | email: info@yha.co.nz


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