A luxury hotel in Queenstown claims a mix-up over online reviews has cost it a quarter of a million dollars.

Seven negative reviews attached to a profile of The Rees on the Travelocity website should have been linked to another hotel.

The reviews, by members of the public, had been on the travel booking site since 2008. They complained about smelly rooms, dirty walls and sinking ceilings.

General manager Mark Rose said he discovered the "disastrous" mistake this week after donating a three-night stay as a competition prize.

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The company running the competition told him the winners didn't want the prize because they had read the reviews.

After reading them himself he learned they referred to a rundown hotel, not his hotel, which has "brand new" luxury rooms and apartments.

Rose said Travelocity apologised and removed the reviews.

Based on bookings through rival site Expedia, he estimated the bungle had cost 40 customers a month, worth almost $245,000 over two years.