Case Study: David & Polly Turner: Business Visa - Part 2

We left the UK on 13 October 2013, arriving in NZ on 15 October.  It was a beautiful day as we drove the 170kms from Auckland to Whangarei.  The sun was shining, the hostel was full and it was ours.  Life couldn’t get much better than this.

Jon and Junko were still in residence at the hostel; we had agreed a handover period.  We were to live in one of the guest rooms and use the guests’ kitchen.  Our first job was to complete all the paperwork to finalise the purchase of the property, then came the frenetic activity of setting up a new life.  All the hostel systems had to be changed over into our names: telephone, electricity, computer systems, banking and credit card processing.  The banks were not very helpful.  Despite having a perfect credit record in the UK this counted for nothing in NZ.  We didn’t need credit, but we couldn’t have got it anyway.  They wouldn’t give us a credit card, and it was very difficult to persuade them to allow us to process credit card transactions for the hostel.  There is no such thing as free banking in New Zealand.

Setting up a new life, a new identity is actually quite difficult.  We needed IRD numbers, ACC numbers, and everyone without exception wanted to see our passports.  We must have the most photocopied passports in the world.  New Zealand is quite bureaucratic in a laid back sort of way, so nothing happens very quickly.

21 October 2013 was handover day; Little Earth Lodge was now officially ours, we were in charge.  Jon and Junko, knowing for the last 12 months that they were leaving, had understandably let things slide and they had a young family to look after.  Ratings were falling, so we had to turn things around.  Many items, particularly beds and bedding needed replacing.  The hostel was busy and we certainly had our work cut out.

We were hoping Jon and Junko would stay in the area.  They were good friends and their support would have been useful.  But they had decided to start a new life in Nelson on South Island, so 2 weeks later they departed.  We moved into the owners’ quarters, our sole furniture was a garden table and two plastic garden chairs.  We borrowed some cutlery, pots and pans from the guests’ kitchen.  We had bought some new furniture but this being New Zealand there was no hurry to deliver it.  We were still trying to get everything sorted as well as run the hostel.  We needed some help.

We only received one reply to our advert for wwoofers, but that was all we needed.  Darren and Sue, a 40’s couple from the UK on a round-the-world trip agreed to help with the hostel for 3 weeks in return for free accommodation.  They were wonderful, and took some of the pressure off while we got things sorted.  Lovely people too, thank you Darren and Sue.

It was around this time that the first seeds of doubt began to creep in.  Our Business Plan stipulated that we would double the turnover in 2 years.  We would achieve this by increasing the number of beds and stay open 52 weeks a year.  But increasing the number of beds was not enough, we had to fill, them too.  Whilst we were busy, we were not busy enough to achieve our targets.

Previously business had come from 4 main sources: the BBH hostel network, the Lonely Planet guide, from the local ISites and from our own web site.  Whilst all were contributing, none of them were producing the amount of bookings we expected.  Also the number of passers-by who simply turned up on spec were decreasing.  Something had to be done if we were to achieve our targets.

We started with the basics.  We had new rack cards printed and distributed them to ISites in Whangarei and neighbouring towns.  We looked at our pricing and reduced prices slightly, but not too much because didn’t want to attract the absolute bottom of the market (Little Earth Lodge had always had a reputation as an ‘up-market’ backpackers and it was important to maintain that reputation).  We talked to people and looked at what our competitors were doing.  One local hostel in particular seemed to be doing very well despite being a poor quality hostel.

Our conclusion was that the market was changing.  It appeared that the growth of technology and online booking sites were having a significant effect.  We needed to be part of this to stay in the game.  We chose and Hostelworld as our OTAs (online travel agents).  We would put the double rooms with and the share rooms with Hostelworld.  Posting your details on these sites is often a difficult and complicated process and certainly not for the technically incapable such as us.  So with the help of a friendly local computer expert we went online.  The bookings started to come almost immediately, and continue to do so.  The online rating system on the OTAs does add pressure, but fortunately our ratings have held up very well, being above 90% on both sites.

Our first Christmas was a little strange.  We had been so busy it had crept up on us almost unnoticed.  We have spent several Christmases in warmer climates and it is always difficult to recreate the atmosphere of Christmas when it is hot and sunny.

From Boxing Day onwards we were full-on busy.  We advertised for more woofers but didn’t get any suitable response so decided to see if we could manage ourselves.  We could, but it was very hard work and we had absolutely no free time available.

When we were first grated our visa we only received the first 9 month period.  The visa was for 3 years but we had to apply for the remainder after our initial 9 months.  All was going well, we were meeting our targets, so after 6 months we decided to apply for the balance of the 3 years visa.  An initial enquiry to NZ Immigration confirmed our thoughts that this would be a ‘rubber stamp’ exercise.  They needed confirmation that were had transferred money and bought the business, and they wanted the first 6 months accounts.

It soon became apparent we had big problems.  The immigration officer we were allocated was a female of Russian descent with no sense of humour and a stickler for procedure.  She said we had transferred our funds to New Zealand incorrectly, an insufficient amount, and she wanted fully audited accounts for our first 6 months of trading, an exercise that would cost several thousand dollars for a very small turnover.  The crux of the ‘debate’ (which dragged on for almost 3 months) was around the definition of “total investment”.  In our Business Plan our definition was our total investment in the venture, to include all costs including visa, removal costs, everything.  Her definition of “total investment” was the amount invested in New Zealand, although she did admit eventually that she had never read our Business Plan.

Time was running out.  We could not operate our business without a valid visa and had reached stalemate with NZ Immigration.  We would have to close down in a few days, the implications for all our forward bookings were horrendous.  In desperation we got in touch with Borey, our UK immigration adviser.  Borey agreed to help and literally within hours had resolved the problem.  The moral of the story is don’t try to do this yourself no matter how easy it looks, get the best immigration adviser money can buy.

Another hurdle crossed we were now on the home run.  All we had to do now was increase the number of beds, fill them, and find a Kiwi to employ for the next 12 to 15 months.

We had initially thought of converting the integrated garage in the hostel to form an extra room.  However, when our architect explained the costs and difficulties of the planning process this soon became a non-starter.  We decided on putting extra beds in some rooms and getting a cabin.  We found a company that produced pine clad cabins which not only looked attractive but didn’t require planning permission.  We had the perfect spot to locate it with a wonderful vista across farmland and forest.  Building foundations and putting in an electricity supply were big tasks, but once in place the cabin looked very attractive.  A deck and veranda enhanced its appeal.

Extra guests meant a strain on facilities so we decided to increase the size of the guests’ lounge area and install an extra shower in one of the bathrooms.  A bigger fridge and a heatpump in the guests’ kitchen and lounge completed the upgrade.  This was a large investment but necessary to meet our targets.

Trying to find a Kiwi to employ, which we thought would be difficult, actually landed in our lap.  A neighbour called round one day with the intention of booking rooms for guests at his forthcoming wedding.  During the conversation we found he was looking for work and he agreed to become our housekeeper.

Our turnover in the first year had crept up to the GST threshold so we had to become registered.  Our accountant advised us to become a Limited company, so Little Earth Lodge Limited was born.

Much of this work had been achieved during the quiet winter period.  Other than for a few days we had managed to remain open throughout.  It had been hard work juggling all the improvements but we were now ready for the new season.

Year 2 was our crucial year.  We had comfortably met our income target for year 1, now we had to achieve a $100,000 turnover, a 100% increase on the accounts of the previous owner.  We had far exceeded the level of investment we had said we would make (we had seriously underestimated the cost in NZ of items such as paint).  Time for another hard year.  One little worry was that NZ Immigration had changed the rules surrounding Long Term Business visa and we were not sure how this would affect us.  All we could do was give it our best shot.

We will never really know whether it was our hard work and planning, or just a very good year for New Zealand tourism, but year 2 started really well and never showed any signs of slowing down.  We were just fully booked all the time, and on many days had to turn away substantial amounts of business.  As the season started to draw to a close we knew we would achieve our target.  We had taken 90% of our proposed turnover with 4 winter months still to go.

We do however take some credit for our ratings.  All booking engines have a rating system and any guest has the right to pass comment.  Despite our high turnover of guests we managed to maintain our rating above 90% on all sites and received a special commendation from Trip Advisor.

After the problems we encountered with obtaining our interim visa we didn’t want to leave anything to chance with the big one – our Residency application.  We wanted the best possible advice.  Borey Chum, our previous adviser, recommended Walter Stone, the principle of Eagle Migration, and a past chairman if the immigration advisers body.  We met with Walter, gasped at his fees, and told him failure was not an option.  He replied that if he was not satisfied with our application he would not even submit it.

We spent a month preparing our application.  We had to collate virtually every single piece of paper that had passed through the business: invoices, accounts, bank statements, GST returns, wages documentation, simply everything.  NZ Immigration do not accept any photocopies so all had to be original documents.  Where we could not send originals, copies had to be notorised by a solicitor.  We had to prove we had done everything we said we were going to do: provide receipts for capital spending and investment, prove our business income, prove we were paying taxes and prove we were making a profit and were a viable business.  We even had to get new police certificates from the UK. The co-operation from our accountant was invaluable.  We had set up a limited company in which Little Earth Lodge Ltd paid rent to us as owners of the property.  Accounts were therefore complicated and had to be simplified.

Two years and 1 month after arriving we were finally ready to submit our application.  Normally the process takes 3 years, but you can apply after 2 years if you are confident and can substantiate that you have met your targets.  We were pretty confident we had.  A pile of documents over 1 foot thick were couriered to Walter for his perusal.

We were delighted to receive a phone call from Walter a week later congratulating us on our submission.  He said it was one of the best he had seen and had no hesitation submitting it.  Again, the application would take a minimum of 3 months, and during this time we should carry on as normal and ensure we continued to employ staff.

Though quietly confident, the pressure was now on.  We had reached retirement age, and whilst happy to continue working, the frenetic pace of the last two and a half years could not continue.  If our application was turned down it was unlikely we would be deported, rather we would be given a further 3 years temporary visa to try to do even better.  This was not an option for us, it was now or never.

There was no fanfare, no congratulations, just an email saying our application had been approved.  On 5 February 2016 we received the magic notification asking us to send our passports (and money) to receive our Residents visas.

Was it all worth it?

Looking back over the last 3 years our overriding thoughts have always been ‘will this help us to achieve our targets?’  All our enjoyment, all our achievements have always been overshadowed by the requirements imposed by NZ Immigration.  We are not saying this is unfair or unjust, it could not be any other way; rather it is a Sword of Damocles hanging over you, and it was not until we had our residency status confirmed that we were truly able to relax into our new life.  Had we been younger it would have been different, but we chose to undertake this mission in our 60’s knowing we only had one chance of success, and the pressure was considerable.

Was it worth it?  Yes!  Do we want to return to the UK? Absolutely not, or only for a holiday.  Will we become NZ citizens?  Probably, but that is another 6 years away.

So just what is it about New Zealand that makes all this effort so worthwhile:

  1. the ambience and sheer beauty of the country
  2. the weather
  3. no crowds (except in Auckland) and open roads
  4. the attitude of the people
  5. clean air, clean sea, clean beaches

The downside:

  1. cost of living and taxes
  2. NZ television is rubbish

Finally, for anyone preparing to move to NZ it’s worth mentioning a couple of things:

If you have a new or fairly new car in good condition (no rust) think seriously about bringing it over.  Vehicles, both new and second hand, are very expensive in NZ because they all have to be imported.  The same applies to white goods (washing machines, fridges etc).  If you have ‘good’ furniture it is definitely worth bringing it over, particularly beds, sofas, dining suite, because all furniture is expensive.  The same applies to antiques.

To visit David & Polly at Little Earth Lodge, here are the details:

Address         85 Abbey Caves Road, Whangarei, 0175

Phone            09 430 6562