Rates review puts jobs and hotel investment at risk

28 August 2008

Jobs and hotel investment will be at risk if Rotorua District Council proceeds with proposed changes to its rating system, the Tourism Industry Association New Zealand (TIA) says.

TIA Policy Manager Simon Wallace presented TIA’s submission on the council’s rating review to the council today.

Hotels would be particularly hard hit if the council changed from a land-based rating system to capital value, Mr Wallace said. Some hotels could face rates increases of more than $100,000 a year, at a time when the tourism industry was already grappling with slowing visitor growth and rising costs.

“Hotels cannot simply increase their room tariffs at short notice to cover abrupt increases in their rates bills. To make savings, they will instead be forced to trim costs in staff, maintenance and ongoing investment,” Mr Wallace said.

Large rates increases would deter new hotels from investing in Rotorua. Marketing of Rotorua as a visitor destination was also at risk, as hotels would have to cut back on marketing budgets, he said.

Hotels made a significant contribution of more than $48 million a year to Rotorua’s economy, with nearly 50% of hotel expenditure going into local jobs and 22% being used to buy products from local businesses. They also supported community projects and events through valuable sponsorships.

TIA recommended that the council consider targeted rating of the business sector or other funding mechanisms, Mr Wallace said.

Tourism was a key driver of Rotorua’s economy and the proposed rating changes could seriously threaten the region’s economic development.
TIA’s full submission is available at www.tianz.org.nz

ENDS

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