The big read: Auckland Council's targeted rate hike faces stiff opposition

The big read: Auckland Council's targeted rate hike faces stiff opposition

Auckland Council’s proposed $28 million targeted rate on commercial accommodation is being met with some mighty opposition from some powerful industry players.

Tourism Industry Aotearoa says the move will have massive consequences for the city and must be dropped. CINZ says it would create long-term damage to the city’s high-yield and growing business events industry.

‘This targeted rate would be a disaster for Auckland and must be withdrawn,’ says TIA chief executive Chris Roberts.

TIA has made a submission to the Council saying the proposed rate unfairly targets just one sector that makes up less than 10% of Auckland’s visitor economy.

Visitors to Auckland spend $7.5 billion a year across a diverse range of services, including retail, hospitality, transport and activities. Roberts says the commercial accommodation sector receives only 9% of that spend but is being asked to pay 100% of the targeted rate.

‘The new rate is not a bed tax or visitor levy,’ Roberts says. ‘It is a massive rate increase based on capital value to be paid by the building owner, irrespective of the number of guests in each property,’ he explains.

‘The Council continues to insist that the rate can easily be recovered by accommodation providers adding $6 to $10 to the daily bill. This is quite simply wrong.’

Roberts says the proposed rate risks seriously damaging Auckland’s economy, with a number of hotel owners and developers reviewing their commitments to the city.

‘Both the Auckland Council and the Government have identified the need for new hotel developments in Auckland to keep pace with population and tourism growth,’ he explains.

‘Half a dozen hotels are planned, but this is nowhere near enough. An estimated 4300 more rooms are needed by 2025. The targeted rate would immediately wipe $400-$450m off the value of existing accommodation assets and threaten the feasibility of new projects,’ says Roberts.

‘Hotel developers can make their investments anywhere in the world. Many cities are incentivising new investment; Auckland is doing the opposite with this proposed rate,’ he says.

Roberts says TIA will continue working closely with Hospitality New Zealand, commercial accommodation providers and other sector stakeholders to oppose the targeted rate. 

'There are other opportunities to meet the Council’s budget objectives, without unfairly targeting just one sector with a poorly designed measure based on incorrect information,’ he says. ‘We urge the Council and all Councillors to carefully consider the facts provided to them. If they do that, then the targeted rate has to be rejected.’

Meanwhile, Conventions and Incentives New Zealand is adding its voice in opposition to the proposed targeted rate hike, with CINZ chief executive Sue Sullivan saying it is vital the business events sector of the visitor industry is represented in the discussion.

‘Auckland Council’s targeted rate proposal would create long-term damage to the city’s high-yield and growing business events industry,’ Sullivan says.

‘The average event will require at least 1000 beds per night. If the supply of high-quality, well-priced accommodation is not available in Auckland, conference delegates will go elsewhere,’ she says.

‘We believe there are other, more commercial ways to secure the $27.8 million Auckland Council is seeking through the targeted rate, and with wider sector input and greater sharing a more productive solution can be found,’ says Sullivan.

Sullivan says there is a fundamental flaw in the Auckland Council’s claim that the immediate direct beneficiaries of their visitor attraction and major events funding are the accommodation providers.

‘The Council has failed to recognise visitors to Auckland have options other than commercial accommodation,’ she says. ‘The number of travellers using Airbnb, holiday houses and staying with friends and family has increased significantly,’ Sullivan says.

‘Auckland Council has not considered this in their calculations.’

‘CINZ will work closely with the tourism and hospitality sector in Auckland, and Auckland Council to seek a suitable solution,’ adds Sullivan.

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