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Auckland’s new hotel tax slammed by New Zealand’s Tourism Minister

By James Wilkinson at NZHIC in Auckland

New Zealand’s Tourism Minister Paula Bennett has slammed Auckland’s ‘bed tax’, calling it “not fair” for hotel owners.

Speaking at the 2017 New Zealand Hotel Industry Conference (NZHIC) in Auckland yesterday (July 20), Bennett said the targeted rate tax would have a major impact on the industry across the board.

“I have made it clear that I don’t think [the tax] is fair,” she told the 500-strong audience. “But it’s not my decision to make as I’m not in local government.”

Bennett said wide-ranging effects of the tax included detracting possible hotel investors in the city, which was experiencing an accommodation boom at present.

“We need to be attracting further investment into Auckland and it [the tax] is not a way to do it,” Bennett said.

“Ultimately, it is unfair and it is putting a burden on our hotels.”

On June 1, Auckland City Council controversially approved the new, targeted rate tax on hotel owners, which is based on the valuation of properties.

The tax is expected to cost properties between NZD$1 and NZD$3 per room, night for motels and between NZD$3 and NZD$6 for hotels.

Speaking exclusively to HM at NZHIC, IHG’s Chief Operating Officer, Asia Middle East and Africa, Alan Watts, said at this point it is not known if or how owners will pass on the tax to consumers.

“It’s still at the provisional and lobbying stage, so it’s not yet clear as an industry how that’s going to be passed on,” he said.

“My understanding is that it won’t be passed on in a bed tax environment in its current proposal as it is in some other countries, but it still largely remains to be seen.”

The nation’s leading associations, Tourism Industry Aotearoa (TIA) and Hospitality New Zealand (HNZ), are firmly against the tax and slammed the move by Auckland Council when it was approved.

TIA Chief Executive, Chris Roberts, said the targeted rate proposal “was based on bad information and a poor understanding of how the visitor economy works [and] there are also unanswered questions over whether it meets relevant legislation”.

HNZ Chief Executive, Vicki Lee, said the targeted rate would have “a devastating impact on Auckland’s commercial accommodation sector and the wider tourism industry”.

The targeted rate tax was a major talking point at NZHIC as it is coming at a time when Auckland’s market is booming and more rooms are desperately needed in the city.

“Auckland and Queenstown are ‘flying’ right now [from a performance standpoint],” said AccorHotels’ Senior Vice President Operations, Accor New Zealand, Fiji and French Polynesia, Gillian Millar.

For more on the New Zealand market performance, click here.

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