HCA welcomes National’s commitment to enduring tourism funding solution

Hotel Council Aotearoa (HCA) has welcomed National’s tourism funding announcement, describing it as a significant step toward resolving one of New Zealand tourism’s longest-running policy challenges.

HCA has consistently argued that New Zealand’s tourism funding problem is fundamentally a revenue allocation and reinvestment issue, with large amounts of tourism-generated revenue collected nationally while many of the costs of hosting visitors sit with local communities. HCA has also consistently advocated that communities should share in the upside from tourism growth and that any solution should be national in scope.

HCA Strategic Director James Doolan said the most significant aspect of today’s announcement was the continued emergence of a national consensus around the need to return tourism revenue to communities hosting visitors.

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“Today’s announcement is further evidence that major political parties now recognise the need for a national solution to tourism funding.”

“For years, the debate has often focused on whether New Zealand needs new tourism taxes. The more important question has always been how tourism-generated revenue is appropriately shared with and reinvested in the communities that welcome visitors.”

HCA noted that New Zealand already generates significant tourism-related tax revenue, including almost $5 billion annually in tourism GST, while government-commissioned research has estimated total tourism-related tax flows at more than $10 billion per year. The industry’s position has long been that communities hosting visitors should receive a more predictable share of that revenue.

“For many years the hotel sector has effectively found itself caught between central government, which collects most tourism-related taxes, and local government, which carries many of the costs associated with hosting visitors. Today’s proposal has the potential to move the debate forward.”

Doolan said HCA was particularly encouraged to see a proposal based on a national framework rather than a proliferation of locally designed visitor levies, accommodation taxes and targeted rates.

“HCA has consistently argued that any tourism funding solution should be done once and done right.”

“The last thing the industry needs is a patchwork of different regional bed taxes or accommodation-specific targeted rates operating under different rules around the country.”

“Visitors travel throughout New Zealand and tourism businesses operate across regional borders. A nationwide challenge deserves a nationwide solution.”

Doolan said councils and communities across New Zealand should benefit when tourism grows.

“We’re pleased to see recognition that local communities should share in the upside from tourism. Tourism succeeds when local communities see tangible benefits from hosting visitors. Any model that strengthens that connection is worthy of serious consideration.”

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HCA noted that it has previously proposed a national Tourism Development Contribution as one possible solution to New Zealand’s tourism funding challenge should additional revenue ultimately be preferred by any new government after the election. However, the proposal was always intended as a circuit-breaker rather than a first preference, reflecting the industry’s view that existing tourism taxes should first be more effectively shared with the communities hosting visitors. Tourists and tourism businesses already contribute significant revenue through existing taxes, levies and charges.

“What we continue to oppose is a proliferation of regional levies, local bed taxes or accommodation-specific targeted rates around New Zealand.”

“Whether the solution is based on existing revenue streams or a future national levy, the principle should be the same: do it once, do it right, and ensure every community that hosts visitors benefits.”

HCA said it looked forward to engaging on implementation details, including how visitor accommodation activity is measured and how revenue is distributed.

“If funding decisions are increasingly linked to visitor accommodation activity, that only reinforces the importance of having robust and comprehensive accommodation data. Good policy requires good data, and any enduring funding solution should be supported by accurate visibility across all forms of visitor accommodation, including the well-established short-term rental sector.”

Doolan said a national registration regime for short-term rental accommodation would significantly improve accommodation data quality while helping ensure a level playing field across the accommodation sector.

In welcoming the proposal, HCA said industry would ultimately want certainty that any successful tourism funding arrangement could endure across election cycles.

“We understand the desire to move quickly, and we welcome that. But tourism is a long-term industry and tourism infrastructure is built over decades. If this approach proves successful, industry will ultimately want the solution reflected in legislation so councils, communities and businesses can plan with confidence and certainty.”

Doolan said the tourism funding debate had evolved significantly in recent years.

“We encourage all political parties to commit to resolving this issue once, resolving it properly, and ensuring every community that hosts visitors shares in the benefits of tourism.”