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Ritchies Transport Holdings director Andrew Ritchie said the company had spent a "huge"amount of money securing long-term accommodation for its staff following the introduction of Orbus, a joint initiative between the Otago Regional Council, Queenstown Lakes District Council and NZ Transport Agency, in November.
"It's been very, very difficult,"Mr Ritchie said
"It's a very unique situation, that's for sure.''
Mr Ritchie said the company needed about 40 drivers every day for both Orbus and its touring fleet.
Since the $2 bus fares were launched, the company had hired 16 new drivers "and we could probably comfortably do with another 10 or 12''.
However, drivers have struggled to find affordable accommodation.
"To get them settled in the area we've bought a couple of apartments and we're renting houses, as well, which is coming at a huge cost to us.
"We've looked at trying to get stuff in Kingston and all sorts of things. As you know, it's a very expensive place to do anything, really.''
Some drivers were permanently relocating from Auckland to Queenstown within the coming weeks, while others have been travelling from Invercargill and Dunedin to work four or five-day shifts and then returning to their homes.
Others were commuting from Cromwell and Wanaka, he said.
"They're really good people and they've been doing a fantastic job.
"We could just do with a few more, that's all.''
Mr Ritchie said the cost of accommodation was "the major issue"in terms of staff retention and he had not ruled out investing in more property to help.
"Hopefully, we don't have to, but if we do, we do.''
While there had not been any formal discussions, all parties, including Ritchies, appeared eager to expand the service.
However, accommodation issues could affect that, given the number of additional drivers which might be required.
"They want to put more services into some areas and we certainly do, too, but we're a wee bit hamstrung by needing more staff.
"We haven't had any in-depth conversation about that, but the take-up on the local bus service has been fantastic, really.''
In January, just over 100,000 passengers used Orbus, a 120% increase on January 2017's 41,000 passengers.
ORC representatives met several groups in Queenstown yesterday to gather feedback and provide a general update on the service.
Operational challenges to date included late and missed services, primarily caused by a shortage of drivers, which was linked to the accommodation issues.
ORC support services manager Gerard Collings said the council was aware concerns about reliability would have caused some to be "hesitant"about using the service.
However, January's total missed trips were about 0.5% of the 7500 total trips which was "well above what we would normally accept as an appropriate standard of service''.