The High Court has dismissed an application for a judicial review of Auckland Council's targeted rate for accommodation providers.
The rate - charged to hotels, motels, serviced apartments, and Airbnb and Bookabach accommodation - is used to fund the operations of Auckland Council's tourism arm.
Legal proceedings were launched in May 2018 following the introduction of the rate in 2017.
Tourism Industry Aotearoa said it was disappointed with the decision.
"TIA has consistently argued that the rate is unfair, as hotels receive only a small portion
of visitor spend in Auckland.
"Many other businesses also benefit from tourism, but they are not facing this extra impost at a time when tourism is slowing."
Auckland-Tamaki-Makaurau hotels reported an average occupancy of 82 per cent, the
lowest occupancy in the city for the last five years, according to TIA.
"The slowdown will be exacerbated by the coronavirus outbreak and, with no new major events scheduled in Auckland this year, hoteliers are not expecting to see any significant improvement in their bottom line."
Auckland mayor Phil Goff has welcomed the court's decision - saying he's pleased but not surprised.
In August 2018, the council faced a revolt over its newly-imposed "bed tax", asking Airbnb owners to pay thousands of dollars more in rates, with some facing increases of between 200 and 300 per cent.
Many began lodging instant appeals after the financial impact was revealed when thousands of property owners received new Auckland Council rates notices following last year's triennial property revaluations.
There are an estimated 8000 properties in Auckland which are listed on Airbnb alone.
Information supplied by the council said that a $1m property in a prime Auckland location which was making this amount was liable for a bed tax of around $6700.
The bed tax is one part of a double-whammy in new costs for homeowners who rent properties on Airbnb. They are also being charged at partial or full business rates, rather than residential rates – to bring them into line with motels and hotels.