Stop grizzling and welcome the visitors

When Auckland Council members sit down today to finalise its budget for the next financial year, they should not be too quick to discard the idea of a targeted rate on land used for travellers’ accommodation to cover the costs of the city’s promotional agency, Auckland Tourism, Events and Economic Development (Ateed).

In the three months since Mayor Phil Goff floated the proposal we have heard a sustained outcry from the tourism industry, supported by the Auckland Chamber of Commerce.

It would be unfair, they say, because accommodation providers receive just 9.3 per cent of the money spent by visitors to Auckland. That figure probably strikes most people as unbelievably low. After air fares, accommodation is the single greatest expense we face when booking a visit to another city and it is hard to believe that is not true of Auckland. The figure is based on estimates by Statistics NZ for the Ministry of Business, Innovation and Employment. It calculates tourists spent $7.4 billion in the Auckland region last year and commercial accommodation providers received $697 million of it.

Shops received the lion’s share (30 per cent) of the money visitors spent, according to the statistics. Restaurants, cafes and bars (17 per cent), passenger transport (excluding air, 16 per cent) and activities (14 per cent) all took more from the tourists’ wallets than our hotels and motels. Hard to believe.

But even if the statistics are giving a true picture, they are taken over a year, covering seasonal peaks and troughs in tourism, and they do not tell us the returns hotels and motels rake in around special events, which are often assisted by Ateed using ratepayers’ money. The egregious example, although it is not an Ateed project, is the British and Irish Lions’ rugby tour that started yesterday.

Hotels and motels have no compunction charging several times more than their standard rates whenever they can. This is not a good moment for them to be arguing a 150 per cent rate rise will cripple their business.

They point out a targeted rate is not a tax that can be passed to customers like GST.

A rate is paid by the landowner, which frequently is not the provider of the accommodation. It could therefore discourage the use of the land for hotels and they claim it is already deterring potential investors for the additional hotels Auckland needs. Although tourism is booming, they say the city’s hotels have just recovered the occupancy levels they need and a targeted rate could make it uneconomic to build more.

These are powerful arguments for council members to withstand. But their first duty is to the ratepayers. Tourism promotion is not one of the vital services all citizens need. It should be financed by those who gain a direct benefit. User pays is not just fair, it is better at keeping an agency such as Ateed on its toes.

Ateed is doing exactly what the accommodation business ought to be doing collectively for itself: thinking of ways to convince travellers through Auckland to stay a few days. Leading hotels should be keen to invest in the effort, not grizzling about the bill.