Visitor levies to be explored in next Annual Plan

The introduction of a localised short-term visitor levy will be explored by the Central Otago District Council (CODC) for public consultation through the 2026/27 Annual Plan.

At the Council meeting at Alexandra today (Wednesday 25 September 2024), councillors considered a report about whether council staff should progress with work on the rating of short-term rentals. It was decided that the Council would pursue this further in its work programme for 2025/26 for consultation in the 2026/27 Annual Plan and implementation on 1 July 2026.

The same report also sought that Council take a public position in support of a Queenstown Lakes District Council (QLDC) proposal to introduce a localised visitor levy and explore options to introduce such a levy within Central Otago.

The CODC had been studying other councils. Through its Long-term Plan (LTP) process, the Rotorua Lakes Council has just approved the charging of commercial rates to short-term rental providers. This meant properties available for more than 60 nights on platforms such as Airbnb would be charged a targeted rate, rather than the residential rate they were previously covered by.

New Zealand has an international visitor levy collected at the border, which has recently been raised to $100, but does not have a national visitor levy to support destinations manage the impacts of visitors.

Through Regional Tourism New Zealand, the Council’s tourism wing Tourism Central Otago (TCO) had long advocated for a national solution to tourism system funding, Central Otago District Council Group Manager – Community Vision Dylan Rushbrook said.

In his report to Council, he states:

“A key building block of the Destination Management Plan is the establishment of sustainable funding to support and manage the visitor economy.

“The funding could support local government manage the destination and enable investment in infrastructure, particularly infrastructure which is strained by growing visitor numbers.”

The Council had the opportunity to work in with QLDC, and by association Destination Queenstown, which had also long advocated for Queenstown to have a local visitor levy, he said.

QLDC gained government approval to explore the option pre-Covid and went through a local referendum in 2018 on the adoption of a localised visitor levy. It received support from the community and was heading towards implementation when the epidemic hit. The matter had been revisited, and once again Queenstown had become vocal in its desire to introduce a levy to support its destination management and infrastructure needs.

The international levy is invested in things such as data, capability building and workforce development. Central Otago was at possible a disadvantage to source this funding because of the relatively small number of international visitors who come to Central Otago, Mr Rushbrook stated.

“How the international visitor levy is spent is still under review, and there may be some change in how this is spent, but staff anticipate it will primarily still be focused on national problems and solutions.

“Central Otago has enjoyed significant growth in its visitor economy, with a spend of up 39% since 2019, which is well above the national average. That growth has primarily been in the domestic market, though operators are reporting a slight slowdown in that market right now as cost living pressures come on.

“At the same time, growth is happening in international markets, particularly the Australian market, which is well served by direct flight connections into Queenstown Airport. With further investment from both the public and private sectors into the visitor economy, it is expected Central Otago will continue to experience growth.

“Furthermore, taking into account Queenstown Airport’s Masterplan and the strong offerings of Queenstown, Wanaka and Milford Sound, there is little doubt Central Otago will experience further visitor demand and related impacts of increased visitors into the future.”

Tourism Advisory Board member, Cr Tamah Alley said it was no surprise that many people wanted to visit us in Central Otago.

“Through the recent Annual Plan process our communities asked us to find alternate ways to spread costs. There is also a ‘fairness’ element to the conversation, that people who visit would pay a contribution to communal services beyond the local eftpos terminal. It is absolutely something that we should spend some effort on cost/benefit analysis to understand the implications before further decisions are made.”

While in support of the Queenstown proposal to apply a levy to for each night’s stay, and the ability for councils to source the income for local projects, TCO would prefer a national levy, Mr Rushbrook said, while also acknowledging this was unlikely to eventuate in the short to medium term.

It was expected there would be some resistance from the commercial accommodation sector initially at the introduction of a levy that would impact on their guests. Staff had not directly engaged with the sector on this proposal as it was primarily a policy position rather than implementation of a levy but would now work through with representatives to achieve the best outcomes.

After discussion, staff were asked to provide a cost/benefit analysis on the introduction of a commercial or targeted rate on short-term rental properties within Central Otago as per the Rotorua approach. Should staff find the cost/benefit analysis favourable, they would bring a paper back to Council for consideration to include as part of the consultation in the 2026/27 Annual Plan.

Council also confirmed its support for QLDC’s proposed local visitor levy and would also investigate the introduction of a localised visitor levy for Central Otago in the future, in the absence of a national solution. Any such levy would need the approval of Central Government and was likely a number of years from being introduced locally.

Recommendations

That the Council:

A. Receives the report and accepts the level of significance.

B. Adopts a formal supportive position of Queenstown Lakes District Council’s proposal to introduce a localised visitor levy.

C. Adopts a supportive position on the investigation of a localised visitor levy within Central Otago in the absence of a national visitor levy.

D. Instructs staff to provide a cost/benefit analysis on the introduction of a commercial or targeted rate on short-term rental properties within Central Otago.