Hotel room rates are set to spike in popular tourist destinations as the accommodation shortage bites.
A Government-ordered report finds the country will be short of 4526 rooms - the equivalent of 26 hotels - over the next decade because of the tourism boom.
The research is part of "Project Palace", set up by New Zealand Trade and Enterprise and is a programme aimed at speeding up new private sector investment in New Zealand hotels.
Five tourist hotspots studied were Auckland, Rotorua, Wellington, Christchurch and Queenstown.
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Auckland will be under intense pressure next year facing "critical constraint status" with events such as the World Masters Games in April, the Lions rugby tour in June-July and the Rugby League World Cup in November.
"There is no historical precedent for the record high occupancy rates expected in Auckland," the report says. Room rates in the city are predicted to rise from an average of $167 a day this year to $191 a day in 2017. By 2025 rates are forecast to average $220 a day.
In Queenstown rates are forecast to rise from an average $188 a day now to $208 next year and $278 by 2025.
The report also finds that home stay service Airbnb is not a threat to traditional accommodation providers and is now relieving pressure on the hotel sector at peak times. The number of visitors to New Zealand has surged to 3.2 million a year.