Auckland’s hotel sector asked for a levy on room nights, the city’s mayor took the idea to central government, and in April the Prime Minister signed a deal agreeing to look at it. On Sunday the National Party ruled it out.
Party leader Christopher Luxon dropped both the accommodation levy and a bank tax as part of a “no new taxes” election pledge, a fortnight after saying publicly that all three of a bed tax, a bank tax and a fuel excise rise were live options.
“This is about no new taxes, and I can’t be clearer,” Luxon said. He told RNZ the following morning that National had looked at the idea but “there’s just no other way that… a couple setting off for a weekend in Queenstown or Auckland are not going to end up paying that bed tax”.
Finance spokesperson Nicola Willis said National had determined “there is no way to do an accommodation levy without increasing costs on Kiwis booking a weekend away”, and would instead “look at how existing mechanisms could be used to support councils with the costs of tourism”, without saying which ones.
For Auckland the timing is awkward. The Auckland Regional Deal, signed by Luxon and Mayor Wayne Brown in April, is the first agreement of its kind in New Zealand and commits central government to explore an accommodation levy policy in 2027. Brown said the announcement raised serious questions about whether the deal means anything.
“The deal is meaningless if the government cannot honour even a relatively modest commitment to explore an agreed proposal,” Brown said in a statement. “Ruling out the bed-night levy without offering any meaningful alternative to support the industry is deeply disappointing.”
Brown has made the same argument for years, that a charge on room nights is not a tax on Aucklanders. “Taxes are unavoidable, you can avoid this by just not staying in a hotel,” he said. He also pointed out what tends to get lost in a campaign argument about tax, which is that the proposal did not start with him. It came from Auckland’s own hotel and accommodation sector.
That matters. The businesses that would have collected the charge, and worn the awkward conversations at check-in, are the ones who asked for it, because the money was meant to come back as event attraction and marketing that fills their rooms.
TΔtaki Auckland Unlimited, the council’s economic and destination agency, was blunt. Director of destination Annie Dundas said the agency was dumbfounded, and that the move sat oddly with the government’s own goal of doubling tourism export earnings by 2034.
“The big question is how committed is the government to supporting tourism?” Dundas said. She said Auckland had put an astronomical amount into hotel infrastructure over the past five years, with the 322 room Radisson RED opening in the city centre in February. “If we can’t demonstrate that we want visitors because we can’t help market and fund and attract events, all of that investment is in jeopardy.”
The sums are not trivial. Auckland Council has estimated a levy of 2.5 to 3 percent on room nights would raise around $27 million a year. The ACT Party’s alternative, announced on 14 August, is a dollar per guest night paid to councils out of existing revenue, which works out at roughly $8.2 million for Auckland. Neither is being collected. Auckland’s accommodation provider targeted rate, the earlier attempt at the same idea, has been suspended since the borders closed in 2020.
The hotel industry’s own peak body had been arguing, two weeks before the announcement, that resisting a levy was the wrong instinct. Speaking at the Aotearoa Hotel Industry Conference in Christchurch on 11 August, Hotel Council Aotearoa strategic director James Doolan told delegates the question had already moved on.
“The question is no longer about whether accommodation providers will be targeted for additional contributions, the question is whether industry helps shape the solution or whether somebody else does it for us,” Doolan said. His preferred design, which he calls a tourism development contribution, would be national, set once at a low rate, applied to short-term rentals as well as hotels, and returned to the region that raised it. “If we’re going to do a bed tax in New Zealand, we should do one that makes New Zealand better at a product and physical level.”
Doolan has been scathing about the old Auckland targeted rate, calling it the world’s worst tourism tax because the bill arrived whether a hotel was full or empty. That is the distinction the sector keeps losing in public, between a rate charged on a building and a charge collected from the guest. For visitors the argument changes little about where to book, and our guide to the best hotels in Auckland sets out the main city centre options.
The policy is not quite dead either. New Zealand First leader Winston Peters says the commitment was made by the government, not by National, and still stands. “The signed deal with Auckland states that these levies will be considered by the government in 2027 β nothing has changed,” he wrote. “But in NZ First we believe a deal is a deal.”
ACT leader David Seymour said it was “theoretically true” that the government was still considering it, while making clear his party never would have agreed. Infrastructure Minister Chris Bishop accepted there was “a bit of friction” between what the government signed and what National is now saying.
Brown meets Bishop and Local Government Minister Simon Watts on 9 September for the deal’s quarterly review. Until then Auckland’s accommodation providers sit where they have sat since 2020, with destination marketing funded from general rates and the council’s own budget, waiting on an election to settle it.
If you want to see where the parties actually sit on tourism funding and local government before November, our voting tool lets you compare their positions side by side.
This article was contributed by Auckland Hotels, a comprehensive guide to accommodation in Auckland, New Zealand.
Should visitors pay a few dollars a night towards the events and infrastructure they use in Auckland, or should the cost keep sitting with ratepayers? Tell us what you think in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job π
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