A lot of travellers come to NZ and don't set up bank accounts.

Backpacker hostels face big fines if they continue the long held tradition of casually offering travellers free beds in exchange for unpaid labour.

Some industry stalwarts say travellers can't be bothered with the paperwork now required to legally work for accommodation, and they worry it will destroy hostel culture.

But the Labour Inspectorate is preparing to get heavy with those who do flout the law and is monitoring job advertisements on backpacker and work exchange websites.

MARION VAN DIJK Last year backpacker accommodation accounted for more than 5 million guest nights and the Labour Inspectorate is getting tough over the industry's use of freebie labour.

Last year the inspectorate handed out infringement notices carrying $5000 and $10,000 fines to some backpacker lodges that were following the then common practice of allowing guests to stay for free in return for cleaning or other work.

READ MORE:

* WWOOFing scheme rejects a host a day seeking travellers as cheap labour

* Travellers exploited through volunteer scheme fed from supermarket waste bins

* Blatant and endemic: Illegal 'volunteer' labour rife in NZ's accommodation industry

* MBIE investigates exploitation of backpacker labour in beds for wages deals

* Support for MBIE probe into alleged exploitation of backpacker workers

* Freebie labour has fish hooks for the tourism industry

Those notices were rescinded after intervention by a national backpacker organisation, and lodges got a grace period to get their businesses in order.

Amanda Cropp All Stars Inn manger Phil Leslie says the paperwork now required means fewer young travellers want to work in return for a bed.

That period is now well and truly over and inspectorate national manager Stu Lumsden said a number of the businesses given warnings about use of volunteers had replaced them with full time employees.

Inspectors were now revisiting hostels to check they were toeing the line, "but I believe that when we go back, we will still find this occurring.

"These practices put workers out of pocket, they undermine others in the industry who do meet all their obligations, and remove a potential employment opportunity from the market."

DAVID WALKER/FAIRFAX NZ British visitor Carl Duce earned more than four months accommodation in backpacker hostels by undertaking work in exchange for a bed.

Lumsden said an Employment Relations Authority ruling against Robinwood​ Farm on the outskirts of Christchurch farm for its exploitation of young travellers labouring in firewood and gardening businesses was "the first cab off the rank."

"Obviously the reason we jumped on this one was because of the exploitation aspect of those overseas people, and the possible damage that could do to our reputation.

"As soon as you are rewarding someone in any shape or form, whether its food or accommodation, then they are employees as far as we're concerned."

Phil Leslie manages the 300-bed All Stars Inn backpacker lodge in Christchurch and heads a group representing city hostels.

He said travellers were resistant to the hassle of signing an employment contract, and the need for a tax number and a bank account.

"They're so used to coming in and saying 'hey, here I am' and we'd throw them in a bed, and away we'd go.

"Now they have to be regarded as a part time employee. They agree that the cost of the bed is deducted from their wages.

"Some just travel around with credit cards, and don't have local bank accounts.

"We used to have up to 10 people working for accommodation; at the moment we have four."

Christchurch backpacker owner Eric Foley heads the BBH network of 160 New Zealand hostels and he said the new bureaucracy would kill the sector's special culture.

He said the danger was that backpackers wanting to make use of casual bed-for-labour deals would decide to spend less time in New Zealand, or choose to visit countries that allowed the practice.

"To describe it as exploitation is an exaggeration. These are intelligent, mobile people and if it doesn't suit them, they just move on.

"There will always be people with a sense of adventure who want to do this."