Some accommodation providers hit by new rates are questioning spending by Auckland Council and its tourism agency on salaries for PR staff.

Auckland hotels and motels have been targeted to help pay for the work of Auckland Tourism, Events and Economic Development and one representative said her members could only dream of spending that the council did.

The Weekend Herald revealed Auckland ratepayers are paying $45.6 million to run communication departments, employing 234 staff, at Auckland Council and five council-controlled organisations, according to a leaked review.

Between 2013 and 2017, salary costs soared by 87 per cent at Ateed, 75 per cent at Auckland Council and 56 per cent at Auckland Transport.

A spokesman for Mayor Phil Goff said while the accommodation sector was not paying for PR at other council agencies besides Ateed, a review was under way.


Hospitality NZ general manager of accommodation, partnerships and communications, Rachael Shadbolt, said small businesses in the sector hit by new rates worked on extremely slim margins and would be interested in council spending.

"The targeted rate was introduced at speed with little opportunity to factor in that cost. They're seeing overblown spending at the council - they could only dream of the salaries that the council has," she said.

Owner of Sudima Hotels and Resorts, Sudesh Jhunjhnuwala, said he had heard about the cost blow-outs at the council and hints of more targeted rates in the pipeline.

"I wish I could run my company with such fiscal irresponsibility. When there is no accountability, then you can expect such things to happen."

He said a group of accommodation providers faced an unfair burden because others in the tourism industry had escaped paying rates for Ateed.

"All this against a background of rapidly rising labour, construction and compliance costs. In a positive New Zealand tourism story Auckland is doing its very best to ensure hotel investment goes elsewhere."

Shadbolt said there were questions around the value of Ateed to moteliers before the rate was imposed.

"Now that they're paying the targeted rate there is going to be more questioning."


While some were doing it tough because of the new rate which ranged widely between $1000 to $20,000 a property, she had not heard of any motels going out of business because of it.

Goff has said that communications costs should be cut by at least 15 per cent over the next three years, as recommended by a review.

"And that he's open to increasing cuts if more efficient ways of operating can be found," the mayor's spokesman said.

The council was consulting the accommodation sector on what role it would have governing the activities and spend of Ateed.