Hoteliers Keeping The Bed Tax Dream Alive

Friday, 8 November 2024, 8:43 pm
Article: RNZ

Tess Brunton, Tourism reporter

Momentum is growing for a national bed tax that could see New Zealanders and international visitors paying extra to help cover tourism-related costs.

As government and council budgets tighten, tourism leaders say the country is falling behind because it does not have a sustainable funding model.

With a possible bed tax, the industry said it could help to pay for visitor infrastructure, marketing, attracting major events and conservation.

Sudima Hotels and Hind Management chief operating officer Les Morgan said tourism was in need of a major shake up after chronic underfunding.

"Auckland is an example of where we have ignored the issue of promoting the city and we are now in an absolute tourism visitor crisis," Morgan told Checkpoint.

"Whatever New Zealand does, we can not continue to do what we have for decades, which is ignore the problem."

Some councils have considered a local bed tax - a targeted rate added to the cost of accommodation.

But Morgan believed an agreed percentage on accommodation across the motu - including short-term rentals like Airbnb - would be fair.

"There are a lot of people involved in this. It could be controversial. Even in the accommodation industry, there would be people who wouldn't necessarily agree with it so in order to get people on board, we need to make sure it's simple and it's easily understood and easy to apply."

It would share the burden of tourist infrastructure costs across all visitors instead of often falling onto communities, he said.

"That would benefit all our cities, all our towns, so that's an easy win."

Morgan acknowledged it would make New Zealand slightly more expensive, and that meant they would need to allocate some of those funds towards marketing.

The Hotel Britomart general manager Clinton Farley said the industry needed a sustainable funding model - it was just a question of whether a bed levy was the right fix.

The international visitor levy was recently raised to $100, earmarked to support tourism and conservation.

Farley wanted more clarity on how the international visitor levy and 15 percent GST were being spent, and whether they could help to improve the situation.

"If we're to put on a national bed levy, whether that be 3 percent or 5 percent - whatever that figure may be - it's taking that domestic tax up to 20 percent at 5 percent visitor levy with the GST, so I guess there's a lot more thinking to be done [on] what taxes we are charging in New Zealand, and can there [be] some form of consolidation?"

If a bed levy went ahead, he said it would need to be nationwide and across all accommodation to provide a seamless and consistent experience for visitors.

Tourism helped to drive the whole economy, impacting businesses across the country but it needed to be well-funded, he said.

In Auckland, Fantail and Turtle owner Travis Field cautiously supported a bed levy if it was invested wisely.

"My wariness with the international visitor levy and a bed tax is that central government will actually just use it to offset money that should be spent anyway from such a great earner for New Zealand and such a great employer."

He wanted funds to be locally used and given to councils to direct the money towards the greatest needs - whether it was visitor infrastructure like public toilets or marketing.

The lack of money to attract major events hit hard, and they often needed to be organised a few years in advance, he said.

"We're seeing New Zealanders going and spending $1500 each to go to a Taylor Swift concert, pay for their accommodation and their airfares to Australia, where that revenue could have been kept in New Zealand.

"So not only are we missing out on the opportunity, we're actually losing that revenue."

He believed a bed tax - if short-term rentals were included - might help to address some of the housing shortages by making it more appealing to rent long-term than stick with the visitor market.

Hospitality New Zealand chief executive Steve Armitage believed a national approach would provide the certainty that the industry needed.

"I also think it makes it much simpler to not have an ad hoc approach where you've got councils trying to do things - well-intentioned as it would be, but it creates an issue for us from a sectorial point of view where you're having to respond to those regional and local requirements."

He also wanted more clarity on the existing border tax. But it was early days, and he said there was plenty of work ahead before they even got to a business case.

Tourism and Hospitality Minister Matt Doocey maintained his stance on tourism funding.

"For me, definitely nothing's off the table at the moment and just holding those discussions, looking at what the sector's actually asking for."

There was not a consensus on a national bed levy yet, but he was open to the conversation. He also acknowledged the industry's concerns about the international visitor levy's clarity and transparency, saying it was a "fair challenge".

"I think at times it has lacked a coherent strategy. I also think that the feedback I've had from the sector about the lack of transparency as well is valid.

"So I'm mindful of those points as we move forward."

Doocey said the government was working on a roadmap to help the industry grow including exploring how it was funded. He expected work on some solutions to be ready to go in the second quarter of 2025.

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