Hobbiton has put Matamata on the map.

On the main street, a sign welcomes visitors to Hobbiton. The town's i-Site information centre's entrance resembles that of a hobbit house.

But if the Lord of the Rings prequel The Hobbit were to be made overseas, another town could lay claim to being Hobbiton as well.

"I don't know how that will affect us," Sue Whiting, the manager of the i-Site, says. "I hope it doesn't come to that."

The Alexander family farm outside of the town was transformed in 1999 from a typical Waikato farm to the home of Middle Earth's hairy-toed heroes.

Russell Alexander, the chief executive of the Hobbiton Movie Set and Farm Tours, could not comment on the possibility of the filming going overseas due to confidentiality reasons, but did issue a warning.

"If it went off shore it would be terrible for New Zealand's tourism and film industries."

Ms Whiting says the appeal of visiting the mythical home of the hobbits has put Matamata on the map for tourists.

"Before 2002 we had an average of 50,000 per year through our doors at the i-Site," she says. "In 2004 we had 364,000 in our info centre - all looking to visit Hobbiton or asking about the site or wanting to get their photo taken.

"Even now we are at an average of 200,000 per year."

Ms Whiting says the extra visitors have rejuvenated the town, with new cafes, bars and eateries popping up.

"The face of the town has changed," she says. "It has been a great asset for our town."

Matamata local Shelley Prescott agrees.

"It has brought in a lot of people, a lot of tourism," she says, adding it would be sad if the films were to be made elsewhere.

Hendrik Ingelbrecht, a South African who has made Matamata his home, works at The Redoubt Bar and Eatery. Each day he says he sees 30 to 40 people stop to see the Gollum statue that sits on the main road outside his work.

"That's a lot of foot traffic from a movie that was three years ago," Mr Ingelbrecht says. "The Hobbit would have increased that by twice as much. So it not being here would be quite bad for us."

"This town was a horse racing town and is now known as Hobbiton, so it certainly affects us the most of New Zealand."

Matamata Piako District Mayor Hugh Vercoe is hopeful the movies will still be produced in New Zealand, with the hobbits once again inhabiting the film set at Hobbiton.

"It has an enormous economic effect for Matamata," he says.

"The people coming through and stopping and spending their money in Matamata before going out to the tours has been enormous, and I think this will continue to grow especially now that the set has been re-established in its original state.

"It will still be fantastic for Matamata."

"I think it would be a terrible shame if the movies went abroad," he continues, "but there are a lot of people who are passionate about the whole sequence of Lord of the Rings and Hobbiton and they will want to come see the original Hobbiton site as opposed to where a movie may be made in a studio or wherever else."

He doesn't think another Hobbiton elsewhere in the world would change that.

"That out there is known as the original Hobbiton site and the fact that it is being redeveloped, people will want to go and see it. That has been established as the true Hobbiton.

"To recreate that and to tell the people it wasn't filmed in the actual site and it has gone somewhere else because it was cheaper, or whatever, I think is a backwards move."