INCREASED ACCOMMODATION RATE WILL BACKFIRE ON AUCKLAND

MEDIA RELEASE

2 June 2017

Waikato-Tainui warns that Auckland Council’s rate increase targeting commercial accommodation operators will put new hotel developments and jobs at risk.

Rahui Papa, Chairman of Waikato-Tainui executive committee Te Arataura, said the new rate flies in the face of Auckland’s Council’s own findings that the city needs some 4,300 additional rooms by 2025 to support tourism development.

“This unfairly targeted new rate is no way to encourage new investment in hotel infrastructure such as our recently announced joint development between Tainui Group Holdings (TGH) and Auckland Airport,” said Mr Papa.

TGH is a joint venture partner with Auckland International Airport Ltd in the development and ownership of the Auckland Novotel Auckland Airport Hotel which opened in 2011, and recently committed to build a second hotel under the Pullman brand as part of the joint venture arrangement.

“It’s about fairness – only a quarter (26%) of visitors to Auckland stay in paid accommodation, so why should they be the ones to pick up the tab?

“The accommodation sector will be forced to recover the additional cost by making reductions in other areas. Jobs make up 30 per cent of operating costs in the accommodation sector, so it is reasonable to expect that reductions in hours and shifts will be an obvious targeted area with a direct impact on workers and consequently their spending in Auckland’s economy,” said Mr Papa.

Tainui Group Holdings (TGH) Chairman Sir Henry van der Heyden agrees that the extra rate burden will have a direct impact on the viability of future investments.

“In a climate where construction and operational costs are already on the rise, this unfairly targeted accommodation tax will further increase costs, negatively affect the economics of new developments and will cause some investors to lose interest,” Sir Henry says.

On TGH’s current and committed hotel developments in Auckland the bottom line impact will be around $10 per room per night across the stock of approximately 500 rooms, which quickly adds up and is certainly not all recoverable from hotel guests.

He said Waikato-Tainui strongly supports regional developments, especially those which contribute to Maori economic development and wellbeing.

“We are extremely disappointed to see Auckland Council ram through a rate increase in such a rushed and non-sign-posted way which will impact hotel guests, operators and owners, including our own people of Waikato-Tainui,” Mr Papa says.

ENDS

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