Hotels and the tourism sector remain at loggerheads with Auckland Council over the controversial bed tax and one leading hotelier says politicians around the country have little understanding of how the sector works.

Tourism Industry Aotearoa says the new rate in Auckland on Airbnb falls ''dismally short'' of the mark and fails to reduce unfairness for traditional accommodation providers.

While the council says it has listened to concerns and introduced a fairer system, TIA chief executive Chris Roberts said only around 9 per cent of Airbnb properties are caught by the extended tax.

He said only 1100 properties are to pay the new rate but, according to a council report, there were more than 12,350 available on Airbnb in the city and TIA is questioning the rationale behind excluding 'room-only' bookings.


"Exempting the room-only providers excludes a significant proportion of the market, as it can be reasonably assumed that some of these room-only providers are generating significant annual income," said Roberts.

His organisation fought a bitter battle against the imposition of a bed tax on hotels and motels, introduced to part fund Auckland Tourism, Events and Economic Development.

Earlier this year the council said it had raised $11.5 million, nearly $2m short of what had been budgeted for in the 2017-18 year.

Auckland Council manager of financial policy Andrew Duncan said last week that during consultation on the proposal to apply business rates to the online accommodation sector, 68 per cent of respondents expressed their support for the proposal.

Through this consultation, the commercial accommodation sector expressed their concerns about the uneven playing field between commercial accommodation providers and properties let for short-term accommodation, such as Airbnb and Bookabach.

''Their concern was that it is unfair that someone using their property commercially in competition to a hotel or motel operator pays lower rates.''

The council had listened to their concerns, Duncan said.

''We have taken care to develop a system that reflects the scale of the commercial operation being undertaken so that levels of rates charged are commensurate."


Airbnb has also hit back at hotels, saying they are enjoying a golden run as tourism booms.

Read more: Accommodation sector booming: guest nights rises to May record

Brent Thomas, Airbnb's head of public policy Australia and New Zealand, said for the accommodation sharing service to grow no one had to shrink. Auckland hotels were healthy and their future was as bright as ever.

''That is why it is so disappointing to see Tourism Industry Aotearoa target mums and dads who rely on sharing a spare room in their own home to make ends meet,'' said Thomas.

The typical Airbnb host in Auckland earns on average just $4200 a year from hosting.

''With the cost of living high, the TIA wants to slug these mum and dad hosts with the same rates as the big international hotels. With hotels full and booming, the TIA wants to make locals who rely on home sharing as an economic lifeline to pay more.''

But the chairwoman of the Scenic Hotel Group, Lani Hagaman, said hotel owners and investors took big risks.

''Where are the incentives for me to put my personal money on the line and take the risk the hotel will be able to cover itself financially while meeting all its legislative responsibilities?''

Hotels faced a huge number of government requirements such as financial and commercial taxes, health and safety regulations, and industrial laws. This compliance adds to the overall cost of running a hotel.

While Airbnb was a valued part of the accommodation industry it didn't have any of the costs hotels had to contend with.

''It's time the government had a realistic look at the commercial accommodation sector to ensure all operators are treated equally, that all costs are distributed proportionally and that all guests, irrespective of whether they choose a backpackers, a five-star resort or an Airbnb, receive the same standards of protection provided by legislation and compliance.''