While legal issues stalling the opening of the new Cleve accommodation units have been overcome, concerns over the profitability of the enterprise and effects on competing businesses remain.
In late 2018, Arno Bay Caravan Park owner Steven Dunn lodged a competitive neutrality complaint regarding the opening of the units, alleging an unfair advantage due to council ownership.
At the first Cleve District Council meeting of the year, chief executive officer Peter Arnold said the council had spent $6500 in legal fees as a result of the complaint, but had been given the all-clear.
However, Mr Dunn is still concerned the units will have a negative impact on his business, and believes they will not be profitable.
He said the council had modelled its finances on an occupancy rate of 65 per cent, which was unrealistic in the Cleve district.
Mr Dunn said local accommodation businesses were attracting as low as 10 to 15 per cent occupancy across the year, which accounted for “essentially the holiday period and that’s it.”
“Nobody gets 65 per cent,” he said.
Mr Arnold previously said the modern style of the units would fill a gap in accommodation options in Cleve, which would prevent “leakage” to other districts or workers commuting from Port Lincoln.
But Mr Dunn does not believe they will attract additional visitors, instead taking existing customers away from surrounding businesses.
“You’re just going to have the same amount of people as you do now,” he said.
“If we were getting 100 per cent occupancy… I could understand why they’d go down that path.”
“It’s not a council’s role to compete against private enterprise.”
While Arno Bay is at a clear advantage during the holiday period as tourists flock to the coast, Mr Dunn said it was visiting workers during the quieter months that would be most likely to choose the council units over existing businesses.
Should the units not make a profit, Mr Dunn said the burden would fall to ratepayers to keep them afloat.
He said he was concerned local accommodation businesses could lose customers, and then be forced to pay higher rates to fund their competition.
The Cleve District Council corporate services manager Meisha Quinn said in a statement that after seeking legal advice to resolve an unexpected legal requirement the council was now working toward getting the units ready for occupation.