Hoteliers Call for Visionary Leadership

Auckland hoteliers are calling for visionary leadership and fresh thinking to help the collapsed and hard-hit sector survive as the low season approaches. In its submission to Auckland Council’s 10-Year Budget (2021-2031) on the future of the Auckland Provider Targeted Rate (APTR), Hotel Council Aotearoa has strongly urged Council to take this opportunity and shelve the rate entirely to show its understanding and support for the region’s devastated accommodation sector.

The controversial APTR, which was introduced in 2017 and suspended from April 2020 due to the COVID pandemic, was designed to fund half of Auckland Council’s spending on major events, destination marketing and visitor attraction. It has been beset by problems, including limited ability to capture all online accommodation providers. Since it is a rate, the APTR does not automatically adjust downwards when accommodation provider revenues and profits fall.

"True recovery must start now, and permanently shelving the APTR is the first and vital step," said HCA’s Strategic Director, James Doolan.

COVID has shown the APTR to be fatally flawed as a revenue-gathering mechanism. The history and rationale for its introduction in 2017 is now completely irrelevant, given the unprecedented environment in which the world is operating.

"Hotels are key infrastructure that attract high-value guests to Auckland. Other businesses and ratepayers benefit when new hotels open for businesses. Reintroducing the APTR as an additional fixed cost for struggling accommodation providers could well break our critical tourism backbone, making it much harder to attract high-value visitors once borders reopen," he said.

"Auckland hotels are performing much worse that you think. RevPAR (revenue per available room) is less than half (51.1%) of what it was a year ago before borders closed. It makes sense if you think about it because the product expires every single day. There is no such thing as pent-up demand for yesterday’s unsold room-night. A hotel stay can’t be home-delivered by Uber or experienced virtually by Zoom."

Hotels can’t pivot any further than they already have and each day without travellers causes further damage. Auckland Council has the opportunity to lead and stimulate the sector’s meaningful recovery by working collaboratively with hotels and the wider the tourism industry.

“We must develop a fairer, fit-for-purpose, funding mechanism with all the hallmarks of international best practice. We must fairly and openly discuss who benefits from Auckland’s tourism spending and destination marketing, rather than simply declare that hotels must shoulder half of the burden, which is what the APTR does,” James Doolan said.