Accom bodies have united in their condemnation of a High Court decision to reject a case arguing Auckland’s accommodation levy is unlawful.
The Accommodation Providers’ Targeted Rate, or APTR, has been loathed by the sector since it was introduced in mid-2017 by Auckland Mayor Phil Goff as a way to raise $14 million annually for tourism and events promotions.
A group of hoteliers formed the Commercial Accommodation Rate Payers (CARP) Inc and in 2019 sought a judicial review on behalf of the city’s accom providers.
But the High Court last week rejected the hoteliers’ case in a major win for Auckland City Council, which spent more than $1.2 million fighting the review.
Goff said he was “pleased but not surprised” by the decision, saying the tax was introduced following consultation with the public and industry and arguing that “more than two thirds of Aucklanders who submitted on the rate supported it”.
Justice Simon Moore did not accept CARP’s argument that the rate imposes an unfair share of the cost of tourism promotion on the accom sector, which receives only ten percent of visitor spending but is expected to shoulder the burden of the promotion costs.
The decision comes as a major blow to the industry following the Productivity Commission’s recommendation late last year that central government ditch plans for bed taxes and levies and instead ask local councils to find other ways to fund tourism needs.
CARP is considering whether to appeal the decision, saying it “remains of the view that the APTR, which was imposed by Auckland Council in 2017, is unfair, inequitable and very poor public policy”.
Hospitality New Zealand, CEO Julie White described the decision as “disappointing and inequitable”, saying: “Accommodation providers already pay their fair share, contributing to New Zealand’s economy, infrastructure, employment and add to the vibrancy of the city.
“The targeted rate is based on the capital value of the business and has no direct link to the visitor it is targeting.
“Only a quarter (26 percent) of visitor nights in Auckland are spent in commercial accommodation – the rest in non-commercial (Airbnb, Bookabach) whom the Council is failing to collect from in any major way.”
Tourism Industry Aotearoa hotel sector manager Sally Attfield says the tax puts a burden on the sector at a time when demand is slowing and the coronavirus is posing a significant threat to occupancy.
“Many other businesses also benefit from tourism, but they are not facing this extra impost at a time when tourism is slowing,” she said.
“In 2019, Auckland-Tamaki-Makaurau hotels reported an average occupancy of 82 percent, the lowest occupancy in the city for the last five years.
“The slowdown will be exacerbated by the coronavirus outbreak and, with no new major events scheduled in Auckland this year, hoteliers are not expecting to see any significant improvement in their bottom line.”
Justice Moore found there was no requirement for there to be any proportion between how much a ratepayer contributes each year and the benefit they receive from the rate itself, a decision Attfield describes as “surprising”.
“The concern is that this opens the door to councils to impose targeted rates on any group of ratepayers they choose, for any reason,” she said.
New Zealand Hotel Owners Association (NZHOA) executive director Amy Robens says members, many of whom belong to CARP, are studying the judgement in detail and will make a decision on whether to appeal “in the near future”.
“NZHOA strongly believes targeted rates and bed taxes are both unfair and disproportionate and therefore are not the most effective or efficient method of raising much-needed growth infrastructure funding and attracting visitors here,” she said.