29 Nov 2016

Tourism levy would be 'administrative nightmare'

4:42 pm on 29 November 2016

A national tourism levy is needed to pay for promotion and infrastructure, but the one being proposed for Auckland is flawed, tourism bosses say.

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Photo: 123rf.com

Auckland Mayor Phil Goff has proposed a 3-4 percent surcharge on hotel, motels, bed and breakfasts, and backpackers to raise up to $30 million to pay for the city's growth.

Prime Minister John Key - who is also Tourism Minister - said he would prefer such a levy be rolled out nationally, rather than just in Auckland.

However, accommodation owners and tourism organisations say the model proposed for Auckland is flawed and it would not work if applied across the rest of the country.

Mr Goff's office calculated the surcharge could add up to $20 a night for a stay in a four or five-star hotel in Auckland.

An extra surcharge would result in hefty price increases for customers, with accommodation providers already facing rising business costs, Auckland hotelier Raman Sarin said.

"In real terms the customer would have to pay this $20, plus the 10 percent mark-up that we will make, so he'll be paying $30 more or 30 percent more in some cases," he said.

Mr Sarin is the chief executive of Sarin Investments, which owns 15 hotels including Auckland's Scene Three, Queenstown's Goldenridge Resort and Invercargill's Ibis Styles by Accor.

He said a national levy would mean New Zealanders staying in another part of the country would pay more as well.

"As it is they are competing with the tourists, because prices are going up because more tourists are coming in."

Hospitality NZ spokesperson Rachael Shadbolt said it was unfair to single out commercial accommodation providers, when they only benefited from 10 percent of total tourism spending in Auckland last year.

She also rejected the idea of rolling out such a levy nationwide.

"I would turn it around the other way and say 'can we have a national discussion first'. Because what we don't want is each individual council setting up its own system, it just becomes an administrative nightmare and also incredibly confusing," she said.

Destination Queenstown chief executive Graham Budd said the model proposed by Mr Goff was fraught with difficulties.

It assumed the cost of the surcharge would be passed on to customers, but that did not always happen, he said.

"What I actually favour, and I think most people do, is a visitor levy that is charged at the point of checkout.

"So rather than being a cost on the business that is passed on, it's a direct cost on the visitor."

This model was successfully used in the US, Europe and in Asia, he said.

"It is very widely used around the world, very proven models and examples that New Zealand can use from, we don't have to reinvent the world," Mr Budd said.

Councils were currently only allowed to raise money through rates and a nationwide visitor tax as Mr Key had suggested would require new legislation, Mr Budd said.

An industry-funded working group on tourism infrastructure, meanwhile, has been looking at ways to deal with the pressure on infrastructure linked to the tourism boom.

Its report, which has been given to the prime minister, is expected to be made public in the next couple of weeks.

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