The new plan will be voted on by councillors in June but there are growing signs there will be modifications to the proposal. The original plan will push up rates by up to 300 per cent on some properties and hit motels and camping grounds on the fringes of Auckland whose operators say the viability of their businesses will be threatened.
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."
By law councils can't impose levies or taxes and can only raise revenue through rates levying property owners, in this case the accommodation sector, the only target.
O'Riley said Ateed had long wanted to move from being rates-funded to being funded by the visitor industry.
A voluntary industry levy had been discussed last year.
"That might have been possible but the mayor [Phil Goff] and the council have an imperative. They need money now to fund their infrastructure projects," he said.
"That imperative meant the only option they had was down the targeted rate approach but certainly over time there is opportunity to modify and look at other ways of trying to bring in a wider [funding base]."
If the targeted rate did go ahead accommodation providers will demand a greater say in where the money was spent. Industry group Tourism Industry Aotearoa has questioned spending on cultural events which have little effect on boosting bed nights.
During discussions about a voluntary levy Ateed had said it would "explore governance options to allow them to have more of a say in that process".
For the current year Ateed has budgeted $354,000 for the Diwali Festival, $93,000 for the Lantern Festival, $300,000 for Pasifika and $500,000 for the Waka Festival.
"If the accommodation providers wanted to make sure that the money they were putting into Ateed is maximising the delivery of bed nights then clearly we'd have to have a discussion with council about how those events were funded and whether they were managed by Ateed at all," O'Riley said.
Ateed was committed to its work programme in the next year but was keen on having the funding issue resolved so it had certainty.
"We will focus on our work plan but we won't be making any future commitment to events until we see the outcome of the targeted rate approach. Our investment levels for next year are pretty committed but we'd be looking out in the 2018-19 year," he said.
O'Riley also revealed Ateed had been forced to bid for one of the two Lions tests this winter. Ateed is spending $1.33m on that during two years and an undisclosed amount on other All Black tests.
Part of this will go to New Zealand Rugby which played cities off against each other, he said. "We've never spent money on All Black test matches before. It was only because the Rugby Union bundled 2016 test matches and Lions together and forced cities to bid for games."
While the third test was a certainty for Auckland, the first was not.
"It was made very clear that if we wanted to have two tests we had to bid for them. "
