Five accommodation developments planned for Rotorua could place a strain on existing hotels, the Tourism Industry Association says.
The developments, a four-star hotel in the Zen building, a hotel in Koutu, an $18.5million resort on the Rotorua lakeside, and a spa hostel in the old Lakehouse and a five-star hotel and spa at Rotorua's Lakefront, have recently been announced.
While the association is in favour of investment in the tourism industry, communications manager Anne-Marie Johnson said there was no projected growth for the city.
Developers have disagreed, saying there are gaps in the market and they believe there is a need for more hotels.
Ms Johnson said the growth was not at a level that would be needed to keep the existing hotels at the same occupancy rates when the new ones came into play.
"The industry has been doing well in the last few months but we need to see a lot more sustained business over a period and time before the city is in a position of growth.
"Rotorua does not show any urgent need for capacity increase with existing hotels ... [the new developments] spread the sum of business all over the hotels."
She said that would be beneficial for consumers.
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Association chief executive Chris Roberts said any development in general was good for the city but there was always an "interesting balance" between supply and demand.
He said generally accommodation providers needed to operate at an 80 per cent occupancy rate year round to be considered profitable, and while Rotorua's had improved to more than 70 per cent, it was still short of that.
Existing members, "while not claiming poverty", still had spare capacity, he said.
Mr Roberts said investors had likely looked at the longer term and as they were confident to go ahead it was "a good story".
Princes Gate Hotel owner Brett Marvelly said there was a flow-on effect from developments that was good for the region. He said while hotels had been under a lot of pressure from rates increases, developers would know what they were doing.
He said established hotels would not be affected by the new developments, and Rotorua was in need of a five-star hotel.
Peter Faulkner, of Pukeroa Oruawhata Group, said there was room at the higher and lower ends of the market, where the five-star hotel and the hostel would sit.
He said there were indications of increased visitor numbers.
"Some of the information we are receiving is that there is a distinctive need for accommodation generally."
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