His application for a pardon led to the Ministry of Justice appointing Kristy McDonald, QC, to review the evidence.
In her report, Ms McDonald said nearly all of the grounds of Mr Watson's application were not "fresh", they had either already been considered by the courts or were available for Watson's trial counsel to use, had they chosen to do so.
Where fresh evidence did arguably exist, Ms McDonald said such evidence was not "cogent and credible" enough to establish a real possibility that the jury would have acquitted Watson, had the evidence been before them.
A main ground of Watson's application was his submission that two key Crown witnesses - Guy Wallace, a water taxi driver, and Roslyn McNeilly, a bar manager - had made statements changing their trial evidence relating to the identification of Watson, Ms McDonald said.
Mr Wallace's position now is that he did not believe it was Watson in his water taxi and nor was Watson the man he saw at a bar earlier in the evening.
Ms McNeilly also retracted her statement she gave during the trial and now does not believe Watson was the man she served at the bar.
"Both Mr Wallace and Ms McNeilly impressed me as sincere in their belief that what they now say is of importance," Ms McDonald said.
"They both hold the view their evidence at trial was crucial in leading to the conviction of Mr Watson."
Ms McDonald said while undoubtedly important and the subject of considerable focus at trial, the evidence they gave was but part of the case against Watson, as had been pointed out by the Court of Appeal.
"In the end it was the combination of a range of evidence that was relied on to support the convictions," she said.
"It could be said that the Crown should not have relied on an inherently unreliable witness (Mr Wallace) who was always uncertain about his identification of Mr Watson and the Defence, for its part, should have been more rigorous in testing that evidence."
Ms McDonald interviewed both witnesses and found the information provided by them in support of Watson's application was not fresh.
It would not have added significantly to the identification evidence both witnesses gave at trial, and had to be viewed in the context of the other trial evidence, including the DNA evidence which suggested that two hairs found on Mr Watson's boat came from Ms Hope, she said.
Ms McDonald also made "various attempts" to interview secret witness A who gave evidence against Mr Watson at trial and who was said to have since retracted his evidence.
"He was not prepared to meet me. I note defence counsel also tried to meet with him at various stages after the trial but he also refused to talk to them."
Ms McDonald also noted that in 2000 the witness told the then Police Complaints Authority (now the Independent Police Conduct Authority) he denied any retraction, and maintained the evidence he gave at trial was truthful.
Watson also argued the Court of Appeal erred by finding there was "extensive cross examination" by trial counsel on the prosecution theory that Watson had returned to his boat twice on the night Mr Smart and Ms Hope went missing.
Ms McDonald agreed there had not been extensive cross-examination on this issue. However, she did not consider that affected the validity of the court's judgment.
Watson claimed his trial counsel had failed to pursue an appeal that the verdicts were unreasonable and could not be supported having regard to the evidence.
However, his trial counsel told Ms McDonald that the decision not to pursue this ground of appeal was made with Watson's fully informed consent, and they did not consider it had any prospect of success.
Ms McDonald's conclusion was that none of the new evidence was sufficiently persuasive that, when considered alongside all the other evidence given at Watson's trial, there was a real possibility that the jury would have returned a different verdict.
The Ministry of Justice said Ms McDonald had conducted a fair and transparent process and it agreed with her conclusions.
She filed her report, which cost $143,000 to complete, to then Justice Minister Simon Power in 2011.
In March this year she provided a further report responding to matters from her original report raised by Watson's lawyers.
Ms Hope's father, Gerald, told TVNZ he still had questions around his daughter's murderer.
"An absolute conviction in my mind of Watson as absolutely, emphatically guilty is yet to be ... provided to me.''
Watson's brother Tom was not surprised the application for the pardon was unsuccessful.
He told TVNZ it was the outcome he was "probably'' expecting.
Mr Watson said he was not expecting his brother to be released on parole until about three years after his minimum non-parole period of 17 years had finished.
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THE ROYAL PREROGATIVE OF MERCY
According to the Governor-General's website, the royal prerogative of mercy provides a special avenue for criminal cases to be re-opened when a person may have been wrongly convicted or sentenced.
It is exercised by the Governor-General as the Queen's representative, acting on advice from the Minister of Justice.
The Governor-General has the power to grant a pardon, reduce a sentence, or refer a case back to the courts for reconsideration.
The grant of a pardon is extremely rare, according to the website.
