Neil Holdom said it was an indictment on the lack of government investment in social housing.
"Every Aussie that visits Rotorua helps save a job and keeps a business open and if they can't find the accommodation they need they will go somewhere else."
"We heard anger last night, but actually it is frustration from local residents."
A researcher studying the plight of the homeless says she was "extremely shocked".
"I'm not looking for handouts - neither are a lot of the families in this situation."