Parents are choosing to wait up to six months for an opening at some early childhood centres in Papamoa despite others in the area having capacity.
Across the Bay there are 500 children on kindergarten waiting lists.
An over-supply of providers in Papamoa has created competition and given parents the chance to be more selective, industry experts say.
Bright Beginnings Community Childcare Centre in Papamoa has a six-month waiting list and Papamoa's New Shoots Children's Centre has a three-month waiting list.
A nearby Kidicorp-operated childcare centre is operating at about 50 per cent occupancy.
Bright Beginnings manager Katie McQuilter said she would not be surprised if Bay childcare services were forced to close.
"It's a tough market and from what I've heard is that some are really struggling because of the funding cuts and the number of ECEs (early childhood education centres) now."
Parents were able to be choosy with what early education centre they attended, she told the Bay of Plenty Times.
"We're really lucky to be doing so well and I put it down to our reputation. We've been here 17 years."
Fiona Hughes, chief operating officer of Kidicorp, one of the region's major providers, said there was an over-supply of early childhood education centres in Papamoa and the centre involved had had issues for "a number of years".
The occupancy rate at the organisation's 16 other Western Bay centres was about 80 per cent.
Tauranga Region Kindergartens principal Peter Monteith, who oversees 18 kindergartens in the Western Bay region, believed Tauranga had reached the point where demand and supply were relative and more early childcare services would promote more competition in an already competitive market.
Papamoa was saturated with childcare services and two kindergartens in the area had a combined waiting list of 103, he said.
"The effect [this will have] on the industry has to be that good staff are spread around an increasing number of services and there will be pressure on employers to replace trained staff with cheaper untrained staff," Mr Monteith said.
Ministry of Education statistics show there are 156 childcare services operating in Tauranga - up 38 since last September. There are another 43 childcare services registered in the Western Bay of Plenty region, bringing the total to 199.
Mr Monteith said Tauranga Region Kindergartens averaged 97 per cent occupancy and there were about 500 children on waiting lists.
Western Bay of Plenty Playcentre Association's Julia Rutherford said the region's 13 centres had seen a small increase in enrolments in the past few years.
Results from a nationwide survey in February of 91 centre operators responsible for running 140 childcare centres showed 70 per cent were operating with empty spaces.
Peter Reynolds, chief executive of the Early Childhood Council, which conducted the survey, said some centres had been forced to increase fees, replace qualified with unqualified staff, defer building maintenance and cut non-essential services.
On the Bay of Plenty Times Facebook page, Reina Rikihana said her son had been on a waiting list since he turned 1 so he could start on his third birthday. She said it was the kindergarten's idea to enrol him that early so he could start immediately.
