“We are all well aware that the tourism industry is a megastar. It is an industry that brings spenders to the country, regions, cities, towns, villages and rural areas. And all New Zealanders benefit in some form or another from this industry.
However, there are costs associated with this industry (as with all industries), there are increased infrastructure requirements (from which everyone benefits not just tourists) and advertising spend to ensure that regions attract their share of visitors. However, it appears that Councils with their need for more funds to provide the infrastructure and the promotion of their region believe that the Accommodation Industry should bear the full cost along with the administration costs for collecting the additional funding. Auckland Council simply reallocated a large portion of the budget for attracting events to the City to Accommodation providers through increased rates known as the APTR.
Calling what is happening in Auckland ludicrous, is polite. Their efforts to try and make the increase rating fair has failed dismally. How can rating a one bedroom let at $13,000 – $18,000 be regarded as equitable?
Any Council which targets those listed on peer-to-peer sites is picking the low hanging fruit. Imposing commercial rates only on those properties which are easy to find runs the risk of these properties going underground and even more importantly operating an unsafe and non- compliant business. Or, as we are witnessing, closing.
In Auckland, this is tantamount to killing the goose who lays the golden egg. It is widely known there is not enough accommodation (certainly not enough reasonably priced accommodation) available when there are events held in Auckland. The consequence of home-based B&Bs and self-contained accommodation closing means there will not be enough beds for those from out of town to stay to attend the ATEED promoted events the accommodation sector is being asked to fund. They will not be able to afford to visit Auckland to shop, dine and visit other tourist activities and attend the event. Their purchases in the businesses of Auckland contributes significantly to Auckland’s economy. Accommodation spend is calculated at less than 10 percent of the total visitor spend.
Home-based accommodation scores highly in satisfaction levels especially if it is hosted and especially by the international market. However, they should not have to pay rates that are substantially higher on a per room basis than commercial properties. Commercial rates should be a matter of size and location, not the number of days occupied. At the very least rates should be based on the number of booked units, not days open, as one room for 133 nights would earn significantly less than three rooms for 133 nights.
Everyone should be contributing to rates on an equal basis. Why is it that homeowners who operate small accommodation businesses (and through their guests bring millions of dollars into the local economy) pay commercial rates – yet other home-based businesses, including home-based tourism operators, do not? Many hairdressers, accountants, plumbers work from home and do not pay commercial rates, yet these businesses use as much of the local infrastructure as accommodation providers.
A bed tax is being suggested as the solution, and Airbnb can easily make those payments on behalf of their hosts as they take the payments. It would be much more difficult to implement with those owners who take payments directly, although it is common overseas. This adds to the cost for the tourists and locals. For those on a 30+ day tour this would be significant and again the burden is put on the accommodation industry when the wider community benefits.
Administratively the way Auckland is imposing this rate is less than equitable. Firstly, there is no way that all accommodation lets are being found, and secondly, it is dependent upon the homeowner making a statutory declaration. It seems the frontline staff of Council do not understand the ruling (it is self-contained properties) and not room lets in someone’s home. Twice I have had conversations that illustrate that the concept of a B&B is not understood by the person answering inquiries at Council. All of these blunders and the court case to follow are costing the Auckland ratepayer even more.
As all of Auckland benefits from tourism, the Council should stop worrying about increasing rates by a small percentage. Auckland Council rates are less than most regional cities and this would make it simple and equitable. Taking into account the amount it is costing Auckland Council to implement the APTR it will cost the ratepayer less in the long run. Share the load widely and don’t place the burden on one industry.
There is a broader New Zealand wide issue here. Many Councils are looking to Auckland to see the development of their policies and how these can be implemented in their regions. Every region is short on infrastructure funds and every region wants to spend to encourage tourists because of the benefit they bring to the region but who pays for the underlying cost of the country hosting these tourists. The accommodation industry along with other tourism industry players need to come up with a policy that not only is fair and equitable to all involved but easy for councils to implement and manage. Yes, someone needs to pay for the increase in costs incurred by the increase in tourism but asking one sector of the tourism industry to cover it and the tourists themselves, who have already paid to enter the country and contribute significantly via their spend to local communities and GST to central Government, is not realistic.
All who benefit from tourism should contribute and BBANZ does not shrink from that responsibility but it should be equitable to all involved and all who benefit.
I gratefully acknowledge the Auckland guests whose conversation planted the seed of the title of this article and the assistance given by our Secretary Fiona Rollings and Vice President Liz Webster.”
Bed and Breakfast Association New Zealand