"Queenstown has seen tourism growth at unprecedented levels. There hotel occupancy is now up around 83 per cent - they're running full at peak periods - you try to get a room down there in the middle of winter and you're really going to struggle," Thompson said.
"We're seeing a lot of this spread through into regional New Zealand."
The number of tourists visiting New Zealand has increased by 700,000, or 26 per cent, over the past three years.
Thompson said he believed the country had been caught "a little bit by surprise" at the increasing number of tourists visiting the country.
"New Zealand relies on tourism to a large extent, it's now our biggest export earner generating $13.5 billion in exports in 2015, so we need to get together as a country and get everybody on board to sort out how we are going to get more developed and keep the cost of development down," he said.
We need to get together as a country and sort out how we are going to get more developed and keep the cost down.
The Lions rugby tour scheduled for next winter is also putting pressure on hotels with close to 20,000 Lions supporters expected to travel to New Zealand.
"With so many internationals in Queenstown and Auckland, domestic people can no longer afford a lot of time to come to these locations so they are starting to spread out which is good for the rest of New Zealand. We are starting to see Hamilton and Napier, places like that, pick up extra tourism," Thompson said.
The country needs to start working out how to get additional hotels built, he said.
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