The policy includes a new Great Walk in the South Island. Video / NZ Herald
A prominent voice in the tourism sector is calling on the new Government to bring in a nationwide accommodation levy as a way of sustainably funding the sector.
While Hotel Council Aotearoa (HCA) has previously vigorously opposed local bed taxes, it says a countrywide, centrally administered levy on all accommodationproviders could raise more than $250 million – if the Government matches guest accommodation providers.
HCA strategic director James Doolan said a levy of around 2.5 per cent on top of the room tariff could be placed on all accommodation providers; including hotels, motels, Airbnbs, campsites and rental motorhomes.
This would be collected by the Government and allocated on a pro-rata basis to regions depending on the number of visitors they hosted. This would allow local authorities to make their own decisions on how they spend it, but the emphasis should be infrastructure that meets the needs of visitors and locals.
“The tourism industry is absolutely aligned that New Zealand is too small for a series of different local bed taxes, and that’s the direction that local authorities and the previous Government were heading,” Doolan said.
Like other tourism groups, HCA is also calling for a slice of GST collected from tourists to help alleviate pressure on tourism hotspots such as Queenstown.
Before the pandemic, the Government collected an estimated $3.9 billion a year.
“Popular destinations were receiving large volumes of transient visitors, but with no automatic flow of funding to help deal with resulting infrastructure challenges,” Doolan said.
Unlike in Australia, GST collected by central government on tourist spending is not partially remitted back to local communities, meaning small councils are overly reliant on residential and commercial rates.
“Central government’s GST tax take from tourism should be more than enough to properly fund future tourism development,” Doolan said.
“However, the industry realises that it’s challenging times for the New Zealand economy, and is absolutely prepared to pay its part and look into new fundraising mechanisms.”
Tourism businesses and industry groups had a sometimes fractious relationship with the last Government – which had to shut the borders during the pandemic – and Doolan said they were looking forward to a fresh start with the new one. Offers of industry expertise and help had often been spurned during the pandemic.
“Without genuine reform of funding and governance structures, we won’t see improvement. The hotel sector stands ready to commit time, talent and funding to help the next Prime Minister and Minister of Tourism shape positive change for the entire tourism industry.”
Hotel Council Aotearoa strategic director James Doolan.
Who will fill that tourism role is unclear, as the new Government is weeks away from being formed.
Invercargill MP Joseph Mooney is National’s tourism spokesperson, and for the time being, incoming Prime Minister Christopher Luxon is unlikely to do what former Prime Minister Sir John Key did and take on the portfolio. Luxon used to run the biggest tourism business in the country, Air New Zealand. But speaking to the Herald before the election, he said he wasn’t keen on a specific portfolio - rather, he would “roam” across them. He didn’t rule out the tourism job further into his term as PM.
In National’s manifesto, the party said infrastructure funding and finance were designed to give councils new ways to fund it, including in tourist hotspots.
As part of its “City and Regional Deals” model, an agency would work with local councils to ensure destinations with high visitor numbers but low ratepayer bases could access the funding they need to support tourism infrastructure.
Doolan said hotels collectively comprise the largest category of private sector investment in infrastructure for tourism, an industry worth more than $40b before the pandemic, with $17b of that from overseas tourists.
“Hoteliers have repeatedly requested closer collaboration with central and local government to help drive transformation in the tourism industry.”
The council believed there needed to be a link between volumes of tourism and the amount of money that was automatically made available to local communities under the previous Government.
“And in fact, under many previous governments, not just the last Labour Government, Wellington has essentially centralised the receipts from tourism and required local councils to jump through hoops or make competitive bids for funding.”
HCA argues that New Zealand must avoid an accumulation of different regional taxes or collection mechanisms – such as the controversial Accommodation Providers Targeted Rate in Auckland, which could be imposed after being found to be legal following costly court cases.
Doolan said many small regions lack the capability to design their own bespoke tourist taxes.
“Tourism funding reform should be a politically bipartisan issue and will require new legislation to be implemented.”
He was also worried about cuts to Tourism New Zealand’s budget for marketing the country overseas after spending power had already been eroded by inflation during the last decade.
Grant Bradley has been working at the Herald since 1993. He is the Business Herald’s deputy editor and covers aviation and tourism.
