"It has really challenged us to step outside our comfort zone and look at innovative ways to expand and be an example not just in Rotorua but worldwide.
"We will be chipping in more on top of the funding we have received but the project will do wonders for Rotorua and create lots of jobs."
He said the details of the project were still confidential but confirmed they were looking at "multiple sites around the district".
Ngai Tahu Tourism chief executive Quinton Hall said the funding was a welcome boost to the new Rainbow Springs kiwi project.
"This world class interactive experience will be the first in New Zealand to showcase all aspects of the kiwi life cycle and conservation story, enabling visitors to get up close to and connect with our national bird."
Rainbow Springs first became involved with kiwi conservation in 1975. It is now the leading kiwi hatchery in New Zealand and has hatched more than 1500 eggs at its Kiwi Encounter facility.
Rotorua MP Todd McClay said the funding was another important win for the region's tourism industry.
"The people of the Rotorua region work extremely hard to offer tourists the experience of a lifetime when they visit and it's great to see the Government is taking the right steps to invest in and future proof this vital industry.
"It's been a big couple of weeks for our city, along with all the funding announced we've seen the latest tourism statistics confirm just how strongly our industry is growing," Mr McClay said.
"As the popularity of our region continues to increase it is important that our attractions and infrastructure grow to support the demand."
It is the latest in a series of investments in the region including $1.7 million for Crankworx, $1.5 for the upcoming Mud Festival, $2.5 million for Te Puia and $320,000 for the new night-time light show at the Redwoods.
A total of $23.54 million has been invested in 33 projects since the inception of the Tourism Growth Partnership in 2013.
