Freedom campers who urinate and defecate in public and bathe naked in Lake Taupo are ruining business and a pristine environment, say local tourism operators.
But Taupo Mayor Rick Cooper said he would not shut the door to tourists and self-contained campers could continue parking at the lakefront.
The controversial site on Ferry Rd, within walking distance of the town's shopping centre, was opened to freedom campers last year to cater for Rugby World Cup tourists.
But Taupo DeBretts Spa Resort general manager Kathy Wilson said that in summer the prime site had attracted up to 80 other vans, cars and campers with tents each night, all without their own toilet facilities.
Other accommodation providers had snapped the campers peeing in public, skinny dipping, sleeping rough, and with wet washing hung up to dry on public property.
One camper was reported to have defecated in a rose bush.
There were 1500 designated holiday park campsites already in and around Taupo and Mrs Wilson said commercial operators could not compete.
Between November and January holiday parks had lost $10,000 a month each with campgrounds down 15 per cent in site bookings.
Total losses for that period were estimated at $165,000.
A group of accommodation providers including DeBretts, All Seasons Holiday Park, Taupo Top 10, Turangi Holiday Park and Great Lake Holiday Park, told the Taupo District Council in April freedom camping had a damaging effect on business.
Mrs Wilson said the group was only against freedom camping in urban areas and did not consider self-contained vehicles such as motor caravans part of the problem.
"These people in Jucy vans just rock up and urinate beside these $100,000 caravans at night. It's just not a good image for our town."
She said there were already several other freedom camping spots around the lake and one near Huka Falls.
"Why should non-taxpaying people have the right to park free for as many days as they want downtown and not get fined ... and me as a taxpayer and ratepayer, I can't even park out front of the post office without getting a ticket if I'm there too long."
Destination Great Lake Taupo chairman Paul Winter said the council was providing services in competition with private providers who paid rates to fund the services.
Mr Winter told the council prime lakefront real estate in the public domain was being used for private purposes and the quality of visitor experience for others was being diminished.
But Mr Cooper said true freedom campers, often young foreign backpackers, were being moved on by council security officers who patrolled the area four times a night.
He suggested a photograph showing a man urinating in public was staged and that motorhome owners would not pay $60 to park in a campground when they were self-contained.
"I've got a town here to protect. We're in a recession. I'm not shutting the doors to people for this town.
"We are a tourist town and we survive from the visitor industry."
New Zealand Motor Caravan Association spokesman James Imlach said a survey by a Taupo resident of 91 campers at the site over seven days in March and April, showed each person spent an average $400 in the town. Only one camper was not an association member.
The majority said they would bypass Taupo if the site was not available, while 100 retailers signed a petition supporting it as a freedom camping spot.
He said the association did not condone the behaviour of a "small minority ruining it for everybody else".
Ferry Rd freedom camping rules:
* From 5pm to 10am.
* Self-contained vehicles only may park for two days.
* No campers in cars, vans, tents.