Auckland Council Budget: Hotels want extra rate scrapped with recovery slow

Thursday, 18 June 2020

Tourism businesses fear job losses could surpass 100,000.

Hotel earnings in Auckland are less than half compared with a year ago and occupancy has slumped to 36 per cent, prompting a call for the council to permanently scrap an additional rate on the sector.

The Hotel Owners Association (NZHOA) said earnings-per-room were running at $65 a night in the three-months ending in May, down from $160 a year ago.

The association produced the figures in its submission on Auckland Council's Emergency Budget, which proposes suspending for a year, a $14 million Accommodation Providers' Targetted Rate (APTR).

It has warned the recovery may only just be starting, by the time the rate is proposed to resume in March 2021.

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'The reintroduction of the APTR on 31 March 2021 will have a devastating impact on hotels hardest hit by Covid-19, and facing the longest road to recovery,' said executive director Amy Robens in the submission.

'The true impact of Covid is slightly hidden in these figures as certain hotels in Auckland were used as part of the Government’s quarantine isolation requirements for returning travellers.'

The Grand Mercure Hotel on Auckland's Customs Street.

A group of Auckland hotel and motel owners is separately going to the Appeal Court in a bid to have the rate deemed unlawful.

The APTR was the first fiscal initiative of Phil Goff after his election as mayor in 2016, and replaced general ratepayer funding for half of the cost of tourism promotion, and to stage major events.

With borders closed, the council proposed to reduce by 75 per cent, spending on visitor attractions and major events and planned to resume activity towards March 2021.

NZHOA said business confidence in the hotel sector was much bleaker than general business confidence with hotels facing immediate cashflow problems and an uncertain future outlook.

The association told the council only 26 per cent of visitors to Auckland stayed in commercial accommodation, and revenue made up only 9 per cent of the city's tourism spend.

The total rates paid by the 452-room Grand Millennium in the city centre rose by 82 per cent to almost $1.6 million a year after the APTR layer of $695,000 was added, according to NZHOA.

Robens earlier told Stuff up to 80 per cent of the 10,000 hotel staff who were working pre-Covid-19 had lost their jobs.

'APTR is a rate the hotel sector can not sustain. If it is reinstated, Auckland’s hotel sector faces an even more uncertain future,' Robens said in the submission to the council.

Public consultation on the emergency budget - re-shaped to accommodate an expected $525 million revenue hit - closes on June 19 and will be finalised in late July.