Auckland Mayor Phil Goff is set to water down his bed tax, nearly halving the $28 million targeted rate on hotels and other accommodation providers and excluding most moteliers.

Two sources told the Herald last night about the changes, which Goff has been selling to councillors and Local Boards to get the proposal over the line in his first budget.

Goff has struck problems selling the targeted rate on hotels, motels, backpackers and camping grounds to replace ratepayer-funded spending by Auckland Tourism, Events and Economic Development (Ateed) to attract visitors and support major events.

The proposal has sparked anger within the hotel industry, which says it benefits from 9 per cent of the tourism spend in Auckland but is being asked to pay 100 per cent of the rate. The hospitality industry is also opposed.


Motels in the outer suburbs have also been up in arms at average rates increases of 150 per cent, and in some cases more than 300 per cent, arguing they see little benefit from the work of Ateed.

One source said the revenue target has been slashed. A second source said it has been almost cut in half. Both sources said the targeted rate would be mostly limited to hotels.

Last night, an industry source said "if that's the contempt with which he is going to treat us, I guess we will see him in court."

Tourism Industry Aotearoa is leading the fight against the proposal.

Writing in the Herald yesterday, TIA chief executive Chris Roberts said the rate would fall on the owners of 330 properties across Auckland.

Roberts said where the cost will fall will vary from case to case but "one thing is certain: no customer will see it on his or her hotel bill".

Ateed boss Brett O'Riley told the Herald yesterday he would like to see a wider range of those in the industry fund its work beyond the accommodation sector which is facing a massive increase in rates.

Earlier discussions had included a broader industry-wide levy to raise about $28 million a year needed by the organisation, he said.


O'Riley has headed Ateed for five years and said he favoured a broader approach but the council was left with no option but the targeted rate.

"I would like to see a wider collection of the industry and I think there is interest from people in the industry to contribute but at the moment it's a bit hard to see how you could make it work."

The new plan will be voted on by councillors on June 1.