Job losses are on the cards at the Taupō district's regional tourism organisation Destination Great Lake Taupō after the Taupō District Council cut its operating budget for the upcoming financial year by nearly one-third.

At least two jobs are expected to be lost from Destination Great Lake Taupō's (DGLT) staffing of 7.6 fulltime equivalent employees (excluding Taupō and Tūrangi i-Site staff) and other spending cuts will have to be found to accommodate the $500,000 reduction.

But the move has angered some local business people who say DGLT should be maintaining its marketing presence, not reducing it, so that it will be in a strong position to attract international visitors when New Zealand borders reopen.

Mayor David Trewavas says the reduction to the DGLT grant was made through its statement of intent, which was approved by council resolution on June 17 after consultation with DGLT. No local tourism or accommodation operators were consulted.

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The cut came as part of the council's drive to deliver a zero per cent rates increase this year.

A council media release about the grant reduction quoted council chief executive Gareth Green as saying that with New Zealand's borders currently closed to international visitors, DGLT recognised the need to build on the domestic tourism market, which generates over 60 per cent of the Taupō District's tourism spend.

"In light of this stronger focus on the domestic market, along with the need to deliver operational savings in the Annual Plan, DGLT and council have agreed to a reduction in operational funding for the 2020/21 financial year of $500,000.

"As part of this decision, DGLT will maintain the same level of marketing spend for the region, effectively boosting the domestic spend to entice more Kiwis to visit the district."

DGLT board chairman Ray Salter says the organisation is currently working through how it will reduce its spending by $500,000 but confirmed there would be job losses.

"Clearly there's some funding that wouldn't have to be spent on international marketing and marketing offshore so that's where some of [it] will come from," he said.

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Mr Salter said DGLT had two roles at risk that were specifically focused on international relationships, trade and working with Tourism New Zealand and inbound operators.

He said he had "made it pretty clear" to the council that when the international markets did bounce back, DGLT would need funding restored to enable it to participate in those markets.

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In the meantime, it would be looking at cutting out as many of the less important components of its activity as possible to redirect into domestic marketing to sustain the local tourism industry and the Taupō district.

Mr Salter said the grant reduction had not been signalled in advance but it was no secret the New Zealand tourism industry had been hard hit by Covid-19.

"So, it's not a surprise, but that doesn't make it any easier. It's pretty awful and Jane [Wilson, general manager of DGLT] has certainly borne the brunt of that."

Asked whether there had been any consultation, he said "no, not really".

No council jobs have been lost during the council's drive for savings, although it has a recruitment freeze in place for the 2020/21 year.

Council chief executive Gareth Green said as vacancies arise in the council with natural attrition it would look to alternatives to recruitment, including revising business processes and priorities, reassigning work and redesigning roles.

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The cut to DGLT's funding comes after a new agreement between Taupō District Council and DGLT has brought the Taupō and Turangi i-Sites back under council management.

The council will shift its customer services teams into the i-Sites in the coming months and the i-Sites will run as part of the council's customer service operations.

The Tūrangi council customer services team is presently located in the Taupō District Council's service centre in the Tūrangi town centre.

In Taupō, the customer service team relocated in 2017 to a new service centre in Horomatangi St next to Kiwibank, at a cost of $411,159 for fitout, technology and furniture.