Auckland Airport and Tainui Group Holdings will build a new 311-room luxury hotel near the airport terminal.

Work on the five-star Te Arikinui Pullman Auckland Airport Hotel will begin on August 1 and are part of the multi-billion dollar transformation of the airport.

It will cost more than $150 million to build and the partners hope to have it finished by the first quarter of 2022.

The new Pullman will have a top-floor restaurant and bar will have views across the Manukau Harbour and Waitakere Ranges, and be a short walk from the terminal which will next decade incorporate the domestic facility.

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It is the second partnership between the airport and Tainui. The 4-star plus Novotel Tainui Auckland Airport Hotel was opened in 2011.

Dominion Constructors has been awarded the contract to build the hotel, with construction beginning on August 1.

It will be operated by AccorHotels under the Pullman brand.

The airport and Tainui say architects Warren and Mahoney ''have infused unique Waikato-Tainui cultural elements into the design of the building,'' drawing heavily on the connection between land, sea and sky through the use of natural materials and light, while referencing our unique environment.

The Te Arikinui Pullman Hotel to be built at Auckland International Airport. Image / Supplied
The Te Arikinui Pullman Hotel to be built at Auckland International Airport. Image / Supplied

The project is part of Auckland Airport's multi-billion-dollar infrastructure investment programme, which will transform the airport over the next two decades. This includes a new second runway to the north of the existing one and a new transport system.

Building the hotel will create about 300 jobs during construction and it will then employ 200 people once it is open, said Mark Thomson, Auckland Airport's general manager of property.

"We are proud to take the opportunity today to celebrate the continuation of the successful commercial partnership between TGH and Auckland Airport.''

Chair of the Te Whakakitenga o Waikato, Parekawhia McLean, said the iwi was proud of its role in bringing a spectacular new hotel to the front gateway to the country.

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"It's very fitting that the design for Te Arikinui is inspired by the historical links of Tainui waka at Te Manukanuka o Hoturoa (Manukau Harbour) and the discovery and exploration our tuupuna undertook in settling this area," said McLean.

Chris Joblin, CEO of Tainui Group Holdings said the company existing hotel and the new one would provide a complementary offer to meet the needs of travellers.

''With around 40 million passenger movements forecast by 2040 we believe this will also prove to be an enduring investment to support the economic resilience of Waikato-Tainui," said Joblin.

There are about 21 million international and domestic passengers through the airport a year now.

Inside the hotel which will have 311 rooms. Image / Supplied
Inside the hotel which will have 311 rooms. Image / Supplied

The announcement comes as a report shows Auckland hotel performance is softening.

A New Zealand market report by Horwath HTL out last month says the hotel industry had experienced a significant period of growth in revenue and profitability, but the outlook for further improvement in 2019 and beyond was uncertain.

In Auckland the average room rate had fallen in the year to April, down from $195 to $193 a night.

Auckland also has a large pipeline of new hotels with 13 new ones - totalling 1522 rooms - due to open in the next two years. This is a 16 per cent increase in supply and 53 per cent of them will be 5-star.

''The major challenge facing the industry is the imbalance between the timing of new hotel room supply and the rate of increase in visitor night growth, particularly in Auckland,'' the Horwath HTL report says.

• The name of the new airport hotel, Te Arikinui, has been gifted by Kiingi Tuheitia. Its meaning is 'Supreme Ariki' or 'Supreme Paramount Chief' and in addition to being the chiefly title carried by his mother, the late Te Arikinui Te Atairangikaahu, it is available to all future successors should they wish to use it. The name was chosen to reflect the status and 5-star premium experience that the hotel will offer.