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Hotel Sector Is Ready To Help Next Government Solve Tourism’s Problems

Ahead of this Saturday’s general election, Hotel Council Aotearoa (HCA) has called for the next government of New Zealand to work collaboratively with businesses and local communities to solve tourism funding and structural challenges. Reforming tourism funding in New Zealand could transform our small towns and tourist destinations over the next decade.

“No matter who forms the next government, there must be a change in attitude and approach toward tourism,” HCA Strategic Director James Doolan said. “New Zealanders wanted the tourism industry to build back better after COVID, but without genuine reform of funding and governance structures, we won’t see improvement. The hotel sector stands ready to commit time, talent and funding to help the next Prime Minister and Minister of Tourism shape positive change for the entire tourism industry.”

HCA is the industry representative body for New Zealand’s hotel sector. Hotels collectively comprise the largest category of private sector investment in tourism infrastructure. Hoteliers have repeatedly requested closer collaboration with central and local government to help drive transformation in the tourism industry.

“We don’t need central government to tell us to target ‘high value’ travellers,” says Doolan. “Due to physical isolation and the high cost of air travel, New Zealand is already an expensive destination for international visitors. ‘Higher value low volume’ is a meaningless catchphrase without a real plan for how to achieve it”, he said.

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Attended by over 500 local and international delegates including, the AHICE Aotearoa 2023 conference concluded at the Takina Wellington Convention & Exhibition Centre on Wednesday. The need for tourism industry funding reform was a consistent theme in panel discussions and expert presentations. Caught up in election campaigning, the Prime Minister and other government and opposition politicians were not in attendance to hear the call for change. Industry attendees included senior regional hotel leaders such as Accor’s CEO Asia Pacific Sarah Derry and IHG’s Managing Director Japan Australasia & Pacific Leanne Harwood. Between them, IHG and Accor operate more than 12,000 hotels worldwide.

Prior to COVID, tourism was said to be losing its “social license” in tourist destinations such as Queenstown. Popular destinations were receiving large volumes of transient visitors, but with no automatic flow of funding to help deal with resulting infrastructure challenges. Unlike in Australia, GST collected by central government on tourist spending is not partially remitted back to local communities, meaning small councils are overly-reliant on residential and commercial rates.

Hotel Council Aotearoa has consistently called for local communities to receive an automatic financial benefit from tourism. “Tourist destinations must share in the financial upside from tourism,” says Doolan. “Communities want to see tangible improvements to their local infrastructure and amenities, rather than central government deciding how, when and where to spend $3.9 billion in tourism GST each year. HCA believes local communities can be trusted to invest well in their own infrastructure, attractions and amenities.”

Hotel Council Aotearoa has modelled new industry funding mechanisms that would provide a ‘tourism dividend’ exceeding $200 million annually to local authorities. That tourism divided would be available for reinvestment in ‘human scale’ tourism infrastructure and destination management planning.

HCA argues that New Zealand must avoid an accumulation of different regional taxes or collection mechanisms, because most international visitors tour around the country and many small regions lack the capability to design their own bespoke tourist taxes. Tourism funding reform should be a politically bipartisan issue and will require new legislation to be implemented.

“New Zealand is a unique and wonderful destination,” says Doolan. “But on tourism funding, we don’t need to reinvent the wheel. The next government of New Zealand must show aspiration to identify the best tourism funding mechanisms from overseas and work in partnership with businesses and communities to quickly adapt, improve and implement them here. HCA has been doing the groundwork on this for three years and is ready to help solve this entrenched problem for the benefit of all New Zealanders.”

Doolan noted that little had been said about tourism during the election campaign. New Zealand’s visitor economy should be a source of national pride and a genuine catalyst for future economic growth, but politicians appeared reluctant to outline a transformative vision for the sector.

Tourism was New Zealand’s largest export earner before COVID, and 220,000 people (or 8 per cent of all workers) were directly employed in tourism roles. Prior to the election campaign, the Labour government identified tourism as a top five priority area to drive economic growth in New Zealand.

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