YHA New Zealand 2019 Annual report by YHA New Zealand

2019 annual report

dream explore connect

Exploring Moke Lake

t Contents Executive Summary

Our Environment

Our Hostels

International 20

Our People

Our Financials

Our Guests

Notes to the Summary Financial Statements

Governance 14

Auditor’s Report

Our Community

Acknowledgements 26

Membership 13

About YHA New Zealand YHA New Zealand is a leading provider of quality budget accommodation delivered through 37 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 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 The opening of YHA Lake Tekapo and the adjoining café, Our Dog Friday, has been the undoubted highlight of this year, alongside the launch of our new website and digital membership. Mark Wells, Chief Executive

New Zealand tourism continues to grow, albeit at a slower rate than recent years. Further flattening of this growth rate is anticipated in 2020. International visitor arrivals grew by 2% 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 600,000 guest nights over the year; 388,208 of these were in YHA-managed hostels. This was a decrease on the previous year and on forecast overnights, due in part to the temporary closure of YHA Auckland International for refurbishment and the delayed opening of YHA Lake Tekapo. Key metrics for the YHA-managed network, which now consists of thirteen hostels (out of a network total of 37), include:

• Total bed revenue slightly reduced on previous year due to the temporary closure of YHA Auckland International

3.4

• Bed yield (average price per sold bed) growth of 3.4% to $36.32 • Occupancy levels (adjusted for temporary closures) of over 76% • Revenue earned per available unit (REVPAU) of $30.68; this is a 2% decline on the previous year reflecting softer occupancy levels

• Positive cash flow performance.

BED YIELD GROWTH

We recorded a deficit financial trading result, which was slightly worse than the budgeted deficit. The delayed opening of YHA Lake Tekapo by over four months was a major contributor to this result. General overnight volumes did not reach forecast levels primarily due to some softening in the sector, including a significant decline in youth market arrivals. We are committed to an immediate future in which we operate within our means and a longer-term future in which we progress to profitable financial performance.

OCCUPANCY LEVELS

Network Changes

REVENUE EARNED THROUGH YHA WEBSITE

GREENHOUSE GAS EMISSION REDUCTION

The opening of the new YHA Lake Tekapo in April 2019 is a source of pride and has been well-celebrated in the local community. It has quickly earned a reputation for quality and is already generating the levels of business we anticipated. Adjoining the hostel, but positioned to serve the public, is our licensed café Our Dog Friday. While the food and beverage industry is new to us, the café has had a very promising beginning and we anticipate it becoming increasingly popular as its brand reputation grows. Together, we anticipate our Tekapo developments making a material contribution to our financial performance requirements. We maintain strong brand representation across 33 destinations through 37 hostels, having lost our Franchise partner in Napier following the sale of the hostel. However, we are committed to growing our network when interested, high quality hostel partners arise.

Our focus on YHA Lake Tekapo and associated increase in borrowing levels has constrained other hostel investment over the year. However, we have:

• Re-shaped the earth bank behind YHA Queenstown Lakefront, which mitigates the significant risk of damage from a slip and was also an award-winning engineering feat

• Nearly completed the upgrade of YHA Auckland City’s lifts, which has been a long and challenging project

• Completed the first two stages of refurbishing YHA

Auckland International, which has resulted in a material improvement in our guest feedback and ratings.

Marketing Two key developments over the year have been the launch of our new website and the development and launch of our digital membership product. The website is central to our direct sales strategy and performance, generating over 32% of our total bed revenue and 51% of total online sales. The performance of the new website is outstanding, converting 9% of visits into sales. Nevertheless, our direct sales channels continue to be pressured by online travel agents (OTAs), while Airbnb continues to impact the entire commercial accommodation sector globally. The launch of digital membership took place alongside a new partnership with ISIC New Zealand, and offers a significant number of additional benefits. Over 35% of our members now have a digital membership and we anticipate growth in the coming year. At a general level, youth holiday arrivals into New Zealand have declined this year, particularly from Germany, UK, China, and Australia. However, the strength of our brand reputation and quality standards support our trading position and results, allowing us to comfortably out-perform our competitors. We continue to enjoy increasingly strong domestic market performance, which partly mitigates the impact of reduced youth arrivals.

Aoraki Mt Cook hostels, while the installation of electric vehicle chargers at Aoraki Mt Cook, Franz Josef, and Te Anau is yet another expression of our commitment to the environment as well as meeting the needs of our future guests.

Celebrations Achievements to be celebrated include:

• Continued investments in reducing our environmental footprint through renewable energy, electric vehicle chargers and other initiatives

• Achieving accreditation status with Immigration New Zealand, which supports our staffing requirements

• YHA Aoraki Mt Cook achieving finalist status in the 100% Pure New Zealand Experience Awards

• Placing fourth worldwide among HI National Associations for quality standards

• Becoming one of a small number of HI National

Associations to attain Gold Status, recognising our strategic alignment and compliance

• Retaining more Gold Qualmark ratings than any other accommodation network in New Zealand

• Our staff continuing to express very positive

engagement across the organisation through the annual Staff Survey

• Rebuilding our core ICT infrastructure in support of our digital activity.

In conclusion, and notwithstanding our financial performance challenge, we can celebrate another positive year for YHA New Zealand. Our ongoing commitment to service excellence and quality continues to generate extraordinarily high guest satisfaction levels, while our values-based operational perspective sets us apart from an increasingly cluttered and competitive market. On that basis, we anticipate a positive and longterm future in which we continue to be more than just a bed to our guests and more than just a job to our staff.

Our Environmental Commitment We continue to enjoy a sector-leading reputation for our commitment to sustainable tourism. This year we retained our carboNZeroCertTM certification, achieving an 8% reduction in total emissions.

Mark Wells Chief Executive

Ray Salter National Chair

The new YHA Lake Tekapo includes a solar installation, adding to those in our Wellington, Franz Josef, and

YHA Annual Report 2019

Our Hostels The Hostel Network

Simon Cartwright, Hostel Operations Manager

13 21 3 37

YHA-MANAGED HOSTELS

ASSOCIATE PARTNERS

Our network has remained static with the exception of YHA Napier’s withdrawal following the sale of the property. The opening of our brand new YHA Lake Tekapo hostel is of course a very welcome and exciting addition to the network.

YHA-Managed Hostels

Associate Partners

YHA Aoraki Mt Cook

YHA Arthur's Pass, Mountain House

YHA Auckland City

YHA Bay of Islands, The Rock Adventure Cruise

YHA Auckland International

YHA Gisborne

YHA Christchurch

YHA Glenorchy, Kinloch Lodge

YHA Christchurch, Rolleston House

YHA Golden Bay, Annie’s Nirvana Lodge

YHA Franz Josef

YHA Hokitika, Birdsong Accommodation

YHA Lake Tekapo

YHA National Park Backpackers

YHA Queenstown Central

YHA New Plymouth, Sunflower Lodge

YHA Queenstown Lakefront

YHA Oamaru, Red Kettle

YHA Rotorua

YHA Ohakune, Station Lodge

YHA Te Anau

YHA Picton, The Villa

YHA Wellington

YHA Punakaiki, Te Nikau Retreat

YHA Wanaka

YHA Raglan, Solscape Eco Retreat

YHA Ahipara Backpackers & Holiday Park

YHA Hanmer Springs, Kakapo Lodge

YHA Springfield, Smylies Accommodation

FRANCHISE PARTNERS

Franchise Partners

YHA Waitomo, Juno Hall YHA Westport, TripInn

YHA Bay of Islands, Paihia

YHA Whanganui, Braemar House

YHA Nelson By Accents

YHA Whangarei Falls Holiday Park

YHA Taupo, Finlay Jacks

YHA Whitianga, On the Beach Backpackers

TOTAL HOSTELS

YHA Auckland International following refurbishment

YHA Lake Tekapo The brand new YHA Lake Tekapo opened on Wednesday 17 April, in time for the Easter holiday period. The hostel boasts uninterrupted views across Lake Tekapo to the Southern Alps and an adjoining burger bar, Our Dog Friday. Hostel facilities include:

• Capacity for 128 guests across a variety of private and

multi-share rooms, most with ensuites and many with lake views

• The ability to privatise a wing for exclusive use by large groups

• Fully-equipped modern kitchen facilities, including a secondary kitchen suitable for group use

• Floor-to-ceiling windows in the dining and mezzanine lounge area, offering uninterrupted views of Lake Tekapo

• A self-contained apartment for staff accommodation • Solar panels and hot water, supporting our environmental commitment.

The opening of Our Dog Friday marks our first significant foray into the food and beverage sector and required our marketing team to build an entirely new brand. This purpose-built licensed café provides us with a venue to promote interaction between hostel guests, other visitors to the region and Lake Tekapo residents. It has proved popular with all of these groups, resulting in significantly improved hostel revenue levels overall. We’ve enjoyed very strong hostel occupancy and café patronage, with review ratings of 98% and 95% respectively demonstrating extremely high levels of guest satisfaction.

YHA Annual Report 2019

Hostel Development 2018/19 proved to be an extremely busy year on the change and development front, largely due to the opening of YHA Lake Tekapo. YHA Auckland International closed for twelve weeks from July 2018 for the refurbishment of all accommodation levels. Since reopening, overall guest satisfaction ratings have improved from 81% to 85.3%. It is now one of the highest rated hostels in Auckland, highlighting the importance and value of this work in a highly competitive market. Electric vehicle (EV) chargers were installed at YHA Franz Josef, YHA Aoraki Mt Cook and YHA Te Anau. These are the first public EV charging facilities in these remote locations, with YHA Aoraki Mt Cook offering the only EV charger inside the National Park. We also undertook the following refurbishments and upgrades:

• YHA Queenstown Central’s kitchen was completely refurbished • YHA Wellington’s Atrium kitchen received a minor upgrade • Guest laundries in all YHA-managed hostels have been upgraded to cashless facilities • The first of YHA Auckland City’s lifts was refurbished, with the remaining lift scheduled for completion in September

• Vending contracts were centralised to ensure our guests have 24-hour access to consistent snack selections in all YHA-managed hostels

• We proactively stabilised the earth bank behind YHA Queenstown Lakefront to reduce earthquake risk.

Quality Guest satisfaction levels remain high with all YHA-managed hostels rating above 84% on our external guest rating monitoring tool, ReviewPro. Four of these hostels rate over 90% with YHA Lake Tekapo achieving a standout 98% since its opening. All YHA-managed hostels have retained their Qualmark Gold Sustainable Tourism Business status.

Looking Forward After a busy 2018/19 there are no major development projects planned for this forthcoming year. Ongoing replacement of smaller items such as furniture and carpets will continue. 2019 will see us review our hostel Consistency Standards in accordance with renewed Hostelling International requirements and guidelines.

Our People Our key celebration this year is becoming an accredited employer with Immigration New Zealand. This involved a robust investigation of our human resource policies and procedures to confirm that these align with industry best practices. This accreditation means that while we are committed to training and employing New Zealanders first, we are able to assist some of our managers with a pathway to residency as well as receiving priority processing of visas for our staff.

Maureen McCloy, Corporate Services Manager

People and Culture Staff Composition We employed a total of 170 people as of 30 June 2019 with a full time equivalency of 133. We worked a total of 256,513 hours during the year, which is a decrease of 10,098 hours partially due to the temporary closure of YHA Auckland International. Permanent staff turnover for the year was 26%. This is an annualised figure calculated using permanent staff departures against our average head count over a 12-month period. 60% of staff are female, 40% are male, and 84% of all staff work in hostels. 28 nationalities are represented, reflecting the international nature of our business. New Zealanders comprise 39% of staff with the next three nationalities being British (19%), Indian (5%), and Australian (4%).

A Snapshot of Our People, 30 June 2019 HEAD COUNT

FULL-TIME EQUIVALENTS (FTE)

• Hostels: 84%

(142 staff)

GENDER BREAKDOWN

(111 staff)

• National Office: 16%

(28 staff)

40%

(21 staff)

170

LOCATION AND EMPLOYMENT AGREEMENT TYPE Fixed Term / Casual

Permanent

60%

TOTAL STAFF

• Hostels: 76% (88 staff)

• National Office: 24% (28 staff)

• Hostels: 100% (54 staff)

• National Office: 0% (0 staff)

YHA Annual Report 2019

Gender Equity and Leadership Representation This year we reviewed gender equity and representation among our staff, focusing particularly on leadership roles. Women are strongly represented among our frontline roles but under-represented in more senior leadership roles across the organisation. In support of improving gender representation among these roles, we have committed to identifying and supporting our female staff aspiring to this level, which is reflected in a refined Recruitment and Selection policy.

Long Service Congratulations to our team members who have reached a significant milestone during the year, and thank you for the significant contribution you’ve made to YHA. 15 years

Junko Hashimoto, YHA Wellington

10 years Chieko Bullmore, National Office

EXCEEDED 12,500 STEPS PER DAY

REPORTED IMPROVED ENERGY LEVELS

REPORTED FEELING LESS STRESSED Global Challenge Results

5 years Melanie Evans, National Office Kevin Cameron, National Office Nikhil Rampal, National Office Anasetasia Melei, YHA Wellington Jasmine Jellyman, National Office Teresita Townley, YHA Wellington

Employee Experience We’ve added an employee Net Promoter Score (eNPS) to our annual Staff Survey as a measure of employee experience. This provided a strong eNPS result of 45, akin to the NPS of 49 returned by our guests and supported by a further lift in employee engagement. Our people continue to be emotionally connected to YHA, genuinely caring about their work and YHA’s success.

Wellbeing 63 of our staff participated in the Global Challenge this year, each aiming to walk 10,000 daily steps for 100 days. This is a 55% increase in participant numbers from the previous year. The challenge was sponsored by YHA as a means of promoting physical and mental wellbeing. Over the course of the challenge, participants achieved:

• A combined 84,454,637 steps or 54,691km • 59% exceeded 12,500 steps per day • 63% reported their energy levels had improved • 67% reported feeling less stressed. At our Network Conference in Rotorua we delivered a ‘Wellbeing Matters’ presentation to our Managers, and have introduced a wellbeing model focusing on positivity and gratitude.

What do you like most about working at YHA? “Our culture and values, our sense of family”

“I love the people I work with, they’re all super cool, friendly and try their best for all the guests which is awesome”

“That it is a safe place to work where people feel accepted for who they are and treat others with respect”

Staff Survey Responses

YHA Annual Network Conference, Rotorua

Learning and Development This year we developed a Cyber Security module for our staff to test knowledge and awareness when using internet and online tools, hardware and devices, applications and software.

Service IQ Congratulations to our first Service IQ NZQA Certificate in Tourism Level 3 graduates:

• Anna Allan – YHA Queenstown • Bonny Hamilton – YHA Christchurch • Christina Watson – YHA Lake Tekapo • Rik Winter – YHA Wellington We look forward to bringing more of our employees through this pathway.

Health and Safety This year we refreshed our Health and Safety policy, making it easier to read, more meaningful for our staff, and aligned with our purpose of getting everyone home healthy and safe every day. We continue to see the value of integrated health and safety reporting, through our ability to identify trends in long-run data and rectify issues raised. Health and Safety continues to be the highest scoring section in our annual Staff Survey, confirming a very strong Health and Safety culture across the organisation.

Rik Winter, YHA Wellington

Bonny Hamilton, YHA Christchurch

YHA Annual Report 2019

Our Guests Youth Arrivals Decline

Brian Westwood, Marketing and Sales Manager

Youth holiday arrivals into New Zealand (those aged under 30) have seen a marked decline this year with some significant falls from Germany, UK, China and Australia. This softening of the market has been compounded by Tourism New Zealand’s recent decision to withdraw marketing support for New Zealand as a backpacker destination. The resulting pressure on the backpacker sector has seen some destinations discounting prices to support occupancy levels. We have resisted these tactics and have traded well off our brand strength and the quality of our hostel refurbishment investments in recent years. The domestic market remains strong and we have enjoyed double digit growth as more New Zealanders become familiar with the modern quality standards YHA has to offer.

Improved Online Presence After a year-long preparation process, we launched our new website in July 2018. This has resulted in significant revenue growth through the website in the second half of the financial year. The new site includes several new innovations and tools designed to give our guests the confidence to book, therefore improving sales conversion rates. Recent benchmarking with Hostelling International shows YHA New Zealand leading the international network with a conversion rate of 9%, which is three times higher than the industry standard of 2-3%. Our new website gives us a much-needed modern look that not only converts well, but communicates who we are and what we stand for in a far more dynamic and appealing manner. With so much business being transacted online, it is important to maintain the highest levels of data privacy for our guests and members. New European privacy laws came into effect this year that protect EU citizens beyond European borders. Our existing data privacy policy has been updated to incorporate the minor modifications needed to satisfy these new rules. Our online presence remains strong across multiple platforms including Google Business listings, social media, and Online Travel Agencies, and over 60% of our revenue is now transacted online.

Our Dog Friday Our new licensed café in Lake Tekapo has created the potential for an entirely new mix of guests. This new venture required the development of a stand-alone brand, including designs for our menus, website, and ordering app. The guest profile of our café is still new and includes people who would not necessarily consider YHA as a place to stay.

Our Current Guests We have seen a slight shift in guest mix to include more domestic guests. This has helped mitigate some of the decline in the number of European and UK visitors to New Zealand. However, our domestic group business saw a decline, largely due to the temporary closure of YHA Auckland International for refurbishment, and reduced group availability at YHA Aoraki Mt Cook due to increased independent traveller numbers. Our international group business and number of coach tour guests continue to see good growth. We continue to have a good balance of guests from all of New Zealand’s key source markets.

Where Our Guests Come From North America

United Kingdom

Europe

23%

Asia

Overseas Groups

Others

11%

19%

South America

Australia

New Zealand

NZ Groups

11%

Membership This year we overhauled the delivery of YHA membership through a partnership with ISIC New Zealand and in doing so, introduced the YHA digital membership. Digital membership brings several benefits:

• Significant additional member offers as standard for new and renewing YHA members • The ability for YHA Gold members to add these new digital offers to their existing membership at minimal additional cost

• A reduction in our environmental footprint with 7,100 fewer plastic cards produced compared to last year

• A modern membership platform that meets guest expectations • More cost-effective delivery of our membership program. During implementation of the new membership platform, we saw a decline of 15% in membership sales. We recovered this decline in the second half of the year and expect to see new growth through 2020.

Members as at 30 June 2019

International Domestic Total

2015 11,804

15,129 26,933

2016 9,761

15,116 24,877

2017 8,446

14,650 23,096

2018 7,371

14,706 22,077

2019

13,245 1,551*

7,850 5,985*

21,095 7,536*

*indicates the subtotal of each membership type issued as digital memberships or upgrades.

ISO 14064-1 • certiﬁed organisation

YHA Annual Report 2019

Governance National Board

Maureen McCloy, National Secretary

Our organisation is governed by a National Board, comprised of 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 and to balance the organisation’s commercial realities with our not-for-profit 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 aligns its processes with the Institute of Directors’ best practice and participated in an IOD evaluation process in support of its commitment to good governance. The Board meets at least six times each year, and oversees the leadership and management of YHA through a close working relationship with the Chief Executive.

Board Members as at 30 June 2019 Ray Salter, National Chair Jaya Prasannan, Deputy Chair Nancy Ward, Convenor, Audit and Risk Committee Hayley Groves (formerly Tribble) Ken Griffin Mark Ebrey, from October 2018 Ross Butler, from March 2019 Ian Lothian, from March 2019 During the year we farewelled three National Board members - Kevin Brewer (October 2018), Michael Sheehan (October 2018), and Darren Burden (March 2019). We thank all members for the commitment and range of strengths they brought to the Board, and in particular Kevin Brewer, who served his full nine-year term and led the Audit and Risk Committee from 2011.

National Board visits YHA Lake Tekapo in May. From left to right: Mark Ebrey, Ian Lothian, Nancy Ward, Ken Griffin, Jaya Prasannan, Ross Butler, Hayley Groves. Not pictured: Ray Salter. 14

Member Engagement Engaging our large membership base with matters of governance is an ongoing challenge. We share Board and governance-related updates with YHA News email subscribers, distribute email newsletters on behalf of Branches and Member Groups, hold member meetings over morning tea or lunch, and provide a social media forum to facilitate ongoing member interaction. 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 YHA’s strategic direction and performance. In 2018, 8129 members were registered on the electoral roll, of whom 1029 cast votes. Our AGM in Christchurch was attended by 50 members. 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 two Member Groups - Christchurch and Opoutere, each of these being a less formal network of interested members. This year, the Hawke’s Bay Member Group voted to dissolve, donating their remaining funds towards the Cora Wilding Memorial Award for 2019.

Service and Merit Awards An Honorary Life Membership was awarded posthumously to the late John Hammond for his contribution to YHA over the years. He attended many member engagement functions, and was an excellent National Chair until he stepped down in September 2017 due to ill health. This award was conferred at the 2018 AGM and later presented to his widow, Erin.

Mark Wells and Maureen McCloy present Erin Hammond with John's Honorary Life Membership

YHA Annual Report 2019

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. It was established over twenty years ago to perpetuate the memory of our founder, Cora Wilding, and demonstrates our commitment to being an active member of our community. Awardees are granted a one-year YHA membership and up to $5,000 towards a personal development training course or project that will also benefit their local community. Two awardees were selected in 2018. Thomas James undertook a 10 Day Development voyage on board the Spirit of New Zealand. He reported that he felt privileged to have experienced this development opportunity, and gained confidence, interpersonal communication skills, and leadership skills. “I came to understand that being an effective leader in my community means listening and valuing other people’s perspectives; it means encouraging and inspiring other people to achieve,” says Thomas. Four Year 12 students at Rangi Ruru Girls School were selected for their application to publish a book, Spoonful of Spice, containing recipes and interviews from refugees and migrants in the Christchurch community. Funds are expected to be awarded on publishing in late 2019.

Spirit of New Zealand by Thomas James

Community Projects Every hostel has a local community project. This year some of those projects included: The YHA team in Queenstown sponsor and volunteer in a number of community events including WinterFest, events for Autism NZ and HeartKids, Keep New Zealand Beautiful clean-up day, Mental Health Awareness Week, Sea Shepherd beach clean-ups, and more. They completed tree planting at Lake Hayes and maintain a plot of land on the Ben Lomond Track, which sees staff removing invasive plant species. YHA Auckland completed tree planting on Moutihe Island in the Hauraki Gulf. The Auckland team also volunteered for Merge Café, who support people experiencing homelessness, through deep cleaning their kitchen and dining area. YHA Franz Josef participated in a community clean-up effort at Okarito Beach following a landfill washout. They supported other volunteer groups participating in the clean-up with discounted room rates.

YHA Queenstown team at the Sea Shepherd Beach Clean Up

YHA Franz Josef team cleaning the beach at Okarito

YHA Lake Tekapo worked alongside the local school in planting and maintaining the Lake Tekapo Regional Park. They also participated in their local Keep New Zealand Beautiful clean-up day. Other community contributions included:

• Staff at YHA Aoraki Mt Cook volunteered as marshals

for the Mount Cook Marathon, on the Community Hall Board, and for St John

• YHA Christchurch contributed to the local Botanic D’Lights event

• Staff at YHA Wanaka volunteered at local events, for St

John, with Cardrona’s adaptive programme, and at tree planting sessions

• YHA Hokitika supported the Hokitika Lantern Festival and staff provided voluntary art tuition to a local school

• YHA Waitomo planted and maintained swamp and river areas with Environment Waikato.

YHA Auckland team members volunteering on Moutihe Island

YHA Lake Tekapo team helping school students

YHA Annual Report 2019

Our Environment Our environmental commitments extend right back to our establishment 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 goodfellowship between trampers of all classes.” Over 85 years later our commitment remains, from our local initiatives right through to our global responsibilities. We know our guests and staff value and expect our continued kaitiakitanga – our guardianship of the environment.

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 Waipuna Bush and Hinewai Reserve on Banks Peninsula as our local providers of carbon credits.

Our Carbon Emissions 2017/18

781

tCO2e

TOTAL EMISSIONS

GAS, FUELS, AND RENTAL CARS

ELECTRICITY

AIR AND LAND TRANSPORT, WASTE TO LANDFILL

We achieved an 8% reduction in total emissions, from 851 tonnes of carbon dioxide equivalent (tCO2e) down to 781 tCO2e. Our biggest emissions reductions came from the Aoraki Mt Cook solar installation managed by our Property team. Our emissions intensity is 1.9kg CO2e per bednight across the YHA-managed network.

Solar Installations The new YHA Lake Tekapo includes a solar installation which will heat an estimated 1.3m litres of water, generate an estimated 10,000kWh of electricity, and achieve savings of at least $6000 annually. In April 2019 we completed the three-year review of YHA Franz Josef’s solar installation. This identified carbon reductions of 22.7 tCO2e and system savings of $114,000 for combined Heating, Lighting, and Power (HLP).

Solar panels at YHA Tekapo

Green Footprint Project This ongoing initiative enables our guests to reduce the environmental impact of their travel by contributing to the purchase of native plants. These are planted by our team in Canterbury. In 2018 we planted approximately 1300 native plants at the Lincoln Wetlands south of Christchurch. This reserve was created to protect a river close to Lincoln village and encourage native species by increasing their habitat. We were joined by two local schools and hostel guests.

Other Celebrations This year we partnered with Meridian Energy to install electric vehicle chargers at YHA Franz Josef, YHA Aoraki Mt Cook, and YHA Te Anau. These installations are currently open to the public at no charge, facilitating access to these remote areas for more environmentally-conscious travellers. YHA Aoraki Mt Cook was a finalist in the prestigious Qualmark 100% Pure New Zealand Experience Awards. These awards recognise the best of the best in New Zealand tourism and are intended to inspire continuous improvement among those tourism operators already achieving at a high level. Tiaki (care for the environment) was a strong component of this award application and we’re delighted to have our work in this arena recognised as being among the best in the industry.

ISO 14064-1 • certiﬁed organisation

YHA Annual Report 2019

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 membership is strategically important for YHA New Zealand and achieves a key competitive advantage. We continue to foster our international presence and relationships through the following: PacRim Marketing Collaboration We work with YHA Australia, HI Canada, and HI USA on collective marketing projects to grow awareness of YHA in European and UK markets. This includes content collaboration, joint long-term research on youth purchasing behaviour, sharing market intelligence, and initiating joint marketing campaigns. HI Marketing Forums Hostelling International hosts marketing forums in Europe and Asia each year to build collaboration between the marketing teams of National Associations. The focus is sharing ideas, regional research, and the latest technology used to grow market awareness and sales. These forums strengthen our global reach and provide insights into activity we would otherwise be unaware of. We participated in both forums digitally this year to minimise travel costs. HI General Participation YHA New Zealand continues to contribute positively to HI at a general level and support key meetings. Chief Executive, Mark Wells, attended the HI Conference in Iceland in October 2018, while Marketing and Sales Manager, Brian Westwood, remains an active participant in HI Membership and Marketing matters. YHA Australia Relationship We continue to enjoy a close collaborative working relationship with YHA Australia at both management and operational levels. This includes structured meetings among senior management as well as staff participation in each country’s key meetings, including Mark Wells participating in YHA Australia’s development of their new Strategic Plan.

Clockwise from top: a private ensuite room at YHA Christchurch, a multishare room at YHA Christchurch, the view from YHA Auckland City, YHA Franz Josef, common areas at YHA Franz Josef, common areas at YHA Wanaka, gardens at YHA Whanganui

YHA Annual Report 2019

Our Financials Youth Hostels Association of New Zealand Inc SUMMARY STATEMENT OF COMPREHENSIVE REVENUE AND EXPENSE FOR YEAR ENDED 30 JUNE 2019

2019 2018 $ 000s $ 000s

GROSS REVENUE

14,241

14,885

TOTAL EXPENDITURE

15,244

15,299

Net Surplus/(Deficit) before Financing Costs

(1,003)

(414)

(809)

(755)

(1,801)

(1,161)

(791)

(24)

(1,264)

(112)

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 NET SURPLUS/(DEFICIT) FOR THE YEAR Revaluation of Land and Buildings TOTAL COMPREHENSIVE REVENUE (DEFICIT)

(2,704) (2,449) 113

(155)

(2,591)

(2,604)

SUMMARY STATEMENT OF CHANGES IN EQUITY OR THE YEAR ENDED 30 JUNE 2019 F

2019 2018 $ 000s $ 000s

TOTAL COMPREHENSIVE REVENUE FOR THE YEAR (DEFICIT)

(2,591) (2,604)

Net Movement in Equity for the Year

(2,591)

(2,604)

31,715

34,319

29,124

31,715

Equity at Start of the Year TOTAL EQUITY AT END OF THE YEAR

SUMMARY STATEMENT OF FINANCIAL POSITION S AT 30 JUNE 2019 A

FUNDS OF THE ASSOCIATION

2019 2018 $ 000s $ 000s

Accumulated Funds

16,561

19,265

Revaluation Reserve

12,563

12,450

TOTAL ASSOCIATION FUNDS

29,124

31,715

These were represented by:

2019 2018 $ 000s $ 000s

ASSETS Current Assets Long-term Lease paid in advance Investment - Lightning Lab Mortgage Investment

393

1,222

1,639

1,751

145

Assets Classified as Held for Sale

Investment Property

2,986

52,160

47,135

4,713

4,174

59,070

57,413

Property Plant & Equipment Intangible Assets TOTAL ASSETS

LESS LIABILITIES Current Liabilities Term Liabilities

29,946

5,243

20,455

TOTAL LIABILITIES

29,946 25,698

NET ASSETS PER THE ASSOCIATION’S FUNDS

29,124

31,715

On Behalf of the National Board

Ray Salter – National Chair

N Ward – Convenor, Audit and Risk Committee

SUMMARY STATEMENT OF CASH FLOWS F OR THE YEAR ENDED 30 JUNE 2019 Net Cashflows From Operating Activities Net Cashflows From Investing Activities Net Cashflows From Financing Activities NET INCREASE / (DECREASE) IN CASH Add Opening Cash Balance CLOSING CASH AND BANK BALANCES

2019 2018 $ 000s $ 000s 222

543

(5,279)

(7,121)

3,567

7,649

(1,490)

1,071

632

(439)

(858)

632

REPRESENTED BY: Cash at Bank and on Hand

750

Bank Overdraft

(858)

(118)

(858)

632

YHA Annual Report 2019

Notes to the Summary Financial Statements For the year ended 30 June 2019

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 2019. 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 16 August 2019.

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.

Going Concern During the year YHA breached its performance-based banking covenant. All bank debt is therefore classified as current liabilities in the statement of financial position, which has resulted in a significant net current liability position as at 30 June 2019. However, following balance date, the bank provided a formal waiver and amended the covenant. Earnings before interest, tax expense, depreciation and amortisation of intangibles (EBITDA) is to be maintained at a minimum of 1.5 times gross interest expense (previously 2 times). This will be tested on the last business day of each quarter on a rolling 12 month basis at 30 September 2019, increasing to 1.75 times by 31 December 2019 and 2 times by 31 March 2020. The Board has concluded that it is appropriate to continue to prepare these financial statements on a going concern basis by considering:

• The covenant waiver obtained post year-end which resulted in the bank waiving its right to call the debt as a result of the breaches which occurred during FY19;

• Forecast covenant calculations based on the amended covenant which do not indicate a breach of covenant within 12 months from signing the financial statements; and

• Forecasts being based on reasonable assumptions, having regarded recent performance and costsaving measures being implemented as well as flexibility available to further reduce the cost base if required.

Audit Opinion An unqualified audit opinion has been received on both the full and summary financial statements for the year ended 30 June 2019. Copies of these may be obtained by phoning (03) 379 9970 or emailing national.secretary@yha.co.nz. These summary financial statements have been examined by auditors for consistency with the full financial statements and were approved for issue by the National Board on 16 August 2019.

Auditor’s Report

Report ofthe theIndependent independent auditor onSummary the summary financial statements Report of Auditors on the Financial ToStatements the members of Youth Hostels Association of New Zealand Inc. to the members of Youth Hostels Association of New Zealand Inc.

The summary financial statements comprise:

The accompanying summary financial statements, on pages 14 to 16 which comprise the summary statement

financial position as at 30 June 2016, theposition summaryas statement of comprehensive revenue and expenses, the the summary statement of financial at 30 June 2019; • ofsummary statement of changes in net assets and the summary cash flow statement for the year then ended, summary statement of comprehensive revenue and expenses for the year then ended; • andtherelated notes, are derived from the audited financial statements of Youth Hostels Association of New Inc. for the year ended June 2016. the summary statement of30 changes in net assets for the year then ended; • Zealand the summary statement of cash flows for the then ended; and for full financial statements The summary financial statements do not contain all year the disclosures required • New Zealand Equivalents to International Financial Reporting Standards. Reading the summary notes to the summary financial statements. • under financial statements, therefore, is not a substitute for reading the audited financial statements of Youth Hostels Association of New Zealand Inc.

Our opinion

Our audit of the financial statements for the year ended 30 June 2016 was completed on 16 August 2016 and

The financial statements from financial statements Youth Hostels Association of New Zealand Inc. oursummary unmodified opinion was issued onare thatderived date. We havethe notaudited undertaken any additional auditofprocedures in forrelation the year ended 30 June 2019. from the date of the completion of our audit and those financial to those financial statements statements and the summary financial statements do not reflect the effects of events that occurred

Insubsequent our opinion, thedate accompanying summary financial statements are consistent, in all material respects, with the audited financial to the of our report on those financial statements. statements, accordance PBE FRS-43: Summary Financial Statements by the Newwe Zealand Accounting Standards Board. This report in is made solely towith the Association’s members, as a body. Our work has been issued undertaken so that might state those matters we are required to state to them in a report from the auditor and for no other

purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other Summary financial statements than the Association’s members, as a body, for this report, or for the opinions we have formed. In addition,

we summary take no responsibility for, nor do we on, any part of the annual report not specifically in The financial statements doreport not contain all the disclosures required by Publicmentioned Benefit Entity Standards Reduced Disclosure our report. Regime (PBE RDR). Reading the summary financial statements and the auditor’s report thereon, therefore, is not a substitute for Directors’ Responsibility the Summary Financial reading the audited financialfor statements and the auditor’sStatements report thereon. The summary financial statements and the audited financial The Directors behalfofofevents the Company for the preparation of the summary statements do are notresponsible reflect theon effects that occurred subsequent to the date offinancial our report on the audited financial statements. statements in accordance with FRS-43: Summary Financial Statements (FRS 43).

Auditors’ Responsibility The financial and our financial reportstatements thereonbased on our procedures, Our audited responsibility is to expressstatements an opinion on the summary which were conducted in accordance International Standard on Auditing (New Zealand) We expressed an unmodified audit with opinion on the audited financial statements in our810: report dated 19 August 2019. Engagements to Report on Summary Financial Statements.

We are independent of the association. Our firm carries out other services for the association in the area

Responsibilities ofprovision the National Board members for the financial statements of treasury advice. The of these other services has not impaired oursummary independence.

The National Board members are responsible, on behalf of the Association, for the preparation of the summary financial statements in Opinion accordance withthe PBE FRS-43: Summary Financial Statements. In our opinion, summary financial statements on pages 14 to 16 derived from the audited financial statements of Youth Hostels Association of New Zealand Inc. for the year ended 30 June 2016 are consistent,

in all material respects, with those audited financial statements, in accordance with FRS-43. Auditor’s responsibility

Our responsibility is to express an opinion on whether the summary financial statements are consistent, in all material respects, Restriction on Use of our Report with audited financial statements based onannual our procedures, which were conducted in with International Standard on Thisthe report has been prepared for inclusion in the report. We disclaim any responsibility foraccordance reliance Auditing (NeworZealand) 810included (Revised), Engagements to Report on Summary Financial Statements. on this report the amounts in the summary financial statements, for any purpose other than that for which they were prepared.

We are independent of the Association. Our firm carries out other services for the Association in the areas of treasury advisory services. The provision of these other services has not impaired our independence as auditor of the Association. Chartered Who we Accountants report to 16 August 2016

Christchurch

This report is made solely to the Association’s 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 Association’s members, as a body, for our audit PricewaterhouseCoopers work, forSimpson this report for the opinions wePark, have 5 Sir Gil Drive,or Canterbury Technology POformed. Box 13244, Christchurch 8053, New Zealand T: +64 3 374 3000, F: +64 3 374 3001, pwc.co.nz

Chartered Accountants Christchurch 26 August 2019

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 2019

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 us continue to deliver on our charitable aims and objects for generations to come.

David Berry (to October 2018)

Honorary Life Members 1967

Gordon Solloway

1968

Jim McKie

1978

Jean Nelson

1982

Peggy Jack Donald Paterson

1986

Rodney Metcalfe

1989

Gwyn Rogers Ruth Wildish

1996

Peter Bugler

Donations

2001

Bill Morris Malcolm Wade

YHA is very grateful for the following donations of $500 or more.

2006

Mike Northmore Gilbert Whalley

Green Footprint Project

2007

Bruce Bertram Moira Lipyeat

2010

Charlie Smith

2011

Ross Butler Lance Kiddey Ben Mitchell John Wilson

2012

Harry Guitry

2013

Bruce Ward

2014

David Berry Amanda Gower

2015

Coral Laughton Clive Croy

2018

John Hammond (passed away March 2018)

The estate of Keith Leslie Stichbury provided $1,000 this year. The Eric Gordon Harvey Trust provided $5,000. In line with the trust deed this is to be used for the benefit of hostels in the South Island, so this yearâ&#x20AC;&#x2122;s amount has been applied to the installation of electric vehicle chargers at YHA Aoraki Mt Cook, YHA Franz Josef, and YHA Te Anau.

$11,145

Hawke's Bay Friends of YHA

$901

To assist in the development of YHA Lake Tekapo We received total donations of $32,045 including: Dennis Viehland

$10,000

Cornelia Van der Hulst

$10,000

Colin and Paula Green

$1,500

John Barnett

$1,000

Anonymous Donor

$1,000

Fraser Ross

$500

Sylvia Allen

$500

Our Structure We are a registered charitable organisation and an incorporated society. Our Charities Services Registration Number is CC37649. YHA New Zealandâ&#x20AC;&#x2122;s registered office is at Level 1, 166 Moorhouse Ave, Christchurch 8011. Bank: Bank of New Zealand Auditors: PricewaterhouseCoopers Solicitors: Young Hunter, Rhodes & Co

Bruce Ward (to October 2018)

dream explore connect

Hollyford Valley

YHA Annual Report 2019

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