Why should you care? One thing that’s been blaringly obvious for a while now is that New Zealanders have fallen out of love with the tourism industry. Tourism has lost a lot of its “social license”. Kiwis get frustrated when our icon sites (many of which are coastal or in national parks) become so overrun with international tourists that locals can’t get reasonable access any more.
As a nation, what we need is more events, attractions, conferences and conventions taking place in our city centres. We need to replicate the success of Sydney and Melbourne and get more tourists and business travellers into our cities. Events like Fifa Women’s World Cup and Ed Sheeran concerts – partially funded by destination marketing and events work – achieve that goal. Kiwis attend these international-standard events, too.
What was the original mistake from 2016? Former Mayor Phil Goff, in winning the mayoralty of Auckland, promised to introduce a hotel bed tax. The Auckland Council made a complete hash of the new regime because it was in a hurry. Goff’s simple bed tax became an expensive and complicated targeted rate instead, a “Frankentax”. It attached to hotel and motel property values and completely ignored entire business sectors that benefit from tourist arrivals. The targeted rate couldn’t be added to the guest bill, so it raised costs and decreased profits almost randomly between different accommodation providers. Chaos ensued.
Plenty of destinations globally have introduced fair and reasonable bed taxes, yet the Auckland Council contrived to introduce a hotel-targeted rate so bad that there is simply no precedent for it anywhere else in the world.
Unsurprisingly, litigation soon followed. The Auckland Council and representative hotel owners are currently awaiting the Supreme Court’s ruling on whether the targeted rate was unfair, but the final decision is largely irrelevant now. With Goff no longer Auckland mayor, you’d be hard-pressed to find anyone knowledgeable who will speak in favour of the APTR. Every industry insider knows it’s junk.
What were the unanticipated events? Covid, border closures and floods, of course, predicted by no one at all. However, at the time Goff was pushing through his targeted rate, hotel experts were repeatedly warning that the tourism industry is highly cyclical and the good times would not last forever. Expensive infrastructure takes years to develop and pay off. It’s misleading to look at one or two good seasons and declare an everlasting upward trend.
When international borders were shut during Covid and the revenues from international tourism plunged to zero, the Auckland Council took the only step it reasonably could and suspended collection of the APTR. Without suspension, it seems likely that some accommodation providers in Auckland – especially smaller motels – would have been bankrupted by it.
And then the mayoralty changed hands.
Mayor Wayne Brown is not a tourism guy, either. Far from it. He inherits a council budget that’s under incredible strain due to the same factors that have pummelled tourism for the last three years – Covid, border closures and flooding.
However, the change in Auckland’s mayoralty isn’t the only personnel change that matters.
In the blink of an eye, we seem to have a complete new team in charge of regulating tourism in Aotearoa. New Zealand’s new Prime Minister, new Minister of Tourism, new Minister for Auckland, new Minister of Local Government and new Mayor of Auckland need to better understand this critical Auckland and New Zealand tourism funding problem before it’s too late. We need to be marketing Auckland to travellers and promoting major events in our largest city for the good of New Zealand’s entire economy. Immediate solutions must be found. In the overall scheme of things, the cost of buying some breathing space is small.
When Auckland suffers, so does the rest of the country. High-value international travellers pass through Auckland on their way to destinations dotted throughout the country. New Zealand has always been a “touring destination”. Whether non-Aucklanders like it or not, Auckland is a major part of New Zealand tourism’s overall success or failure.
Hotel Council Aotearoa is here to help. Throughout Covid, we have a track record of being right on the big issues affecting tourism. In September 2021, while international borders were still closed to international tourists, we publicly called on central government to fund New Zealand’s regional tourism attraction work for three full years. This guaranteed funding would take the burden off strained councils and help New Zealand recover faster after Covid. It would also allow tourism industry stakeholders time to work collaboratively with regulators on a fair tourism infrastructure funding model based on international best practice, not political whim.
It was the right policy 18 months ago and it’s the right policy now.
- James Doolan is strategic director at Hotel Council Aotearoa.
