One of New Zealand's top hotels has been stripped of its Qualmark licence as a bitter battle between owners of the units and the receiver of the hotel's management company continues.

Qualmark general manager Paula McCallum said the licence was terminated this week because the hotel had failed to meet the quality assurance provider's minimum criteria.

One of Qualmark's minimum requirements is that a hotel has a restaurant open to guests for breakfast and dinner.

McCallum said the Westin was "obviously disappointed" by the move, which comes ahead of next year's Rugby World Cup.

Lighter Quay Management, the company that ran the Westin Hotel, fell into the hands of receivers earlier this year after talks broke down between management and creditors.

Since then the owners have been attempting to broker a deal to settle the dispute over unpaid returns with the receivers.

Hotel general manager Marcus Reinders couldn't be reached for comment this morning, but earlier said he believed the hotel still had Qualmark status.

The decision to remove the licence could further jeopardise the hotel's chances of attracting Rugby World Cup bookings, given Qualmark is New Zealand tourism's official quality agency.

More than two thirds of rooms at the waterfront complex on Auckland's lighter quay, which has been operating on reduced staff and amenities for several weeks, are off limits to guests.

The Westin Hotel opened in 2007 and was previously included in Expedia Insiders List's world's top 100 hotels.

Owners' group representative Graham Wilkinson described the decision as inevitable.

"The receivers have managed to turn Auckland's best hotel into something that now does not command the official rating of a camping ground," Wilkinson said.

McCallum said the company would not rule out working with the Westin to reinstate the licence, but said it had to protect the integrity of the system.

"We are New Zealand's tourism's official quality mark and we have to represent that so ultimately the consumer gets the experience that they need."

Qualmark would continue to terminate licence holders who did not meet its standards so as to not weaken the value of Qualmark and quality assurance, McCallum said.

Operators who are stripped of their licence lose the right to promote themselves as a Qualmark licence holder and must remove all Qualmark logos from their premises, marketing material and on their website.

Michael Stiassny of receivers' KordaMentha said while he hoped rational thought would prevail before the Rugby World Cup, a resolution was not close.

"After reading Mr Wilkinson's comments, I doubt it."

"I find it difficult to understand how these people can have rooms out there not being used when the best hotel in Auckland could obviously use those rooms and pay them a rental. But they are prepared to lock their doors and walk away."

Several owners of the hotel's units are awaiting a court decision in which they are seeking to overturn "draconian body corporate rules" which allow the receiver to maintain control over the property and deny owners access to their rooms, Wilkinson said.

The owners were banking on a decision by Christmas so they could call a meeting and "assert their majority control" over the hotel's rooms, Wilkinson said.

An international hotel company is understood to be on standby to take over the running of the hotel if the receivers and the owners cannot resolve their dispute.

Wilkinson said the receivers had insisted on trying to impose non-market rental on the owners, and the owners felt they had no option but to terminate their leases.

"The owners made every effort to negotiate a fair solution including purchasing the assets via a valuation process, arbitration or even leasing them at market rental but all approaches were rebuffed" Wilkinson said.

New Zealand Hotel Council independent chair Jennie Langley said the Westin was a valued hotel council member and she would be surprised if the dispute wasn't resolved in the next couple of months.

"It's a waste to have such a property like that not being fully booked and fully engaged and I'm sure that commonsense will prevail."