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Elm Wildlife Tours was unsuccessful in its application for funding from the strategic tourism assets protection programme.
Its owner, Brian Templeton, is questioning the criteria for success, and says he does not think the decision should have been left to central government.
But the Ministry of Business, Innovation and Employment (MBIE) says applications were assessed by multiple agencies, and the criteria were clear.
A list of successful tourism operators, including those in the South that were willing to be publicly identified, was issued on Saturday.
Otago Museum, Monarch Wildlife Cruises and Tours, Royal Albatross Centre, Larnach Castle and Nature’s Wonders were among the Dunedin tourism companies that received funding.
The museum said it received a grant of $500,000 and a $1million loan.
Mr Templeton said the failure to secure a grant meant the company, which had operated in Dunedin for 30 years, would have to let go its five full-time staff, including Mr Templeton’s son.
"It was sad," he said.
"Right through New Zealand this is going to be a hassle for people in our situation ... You are not competing on a level playing field.".
The company would usually increase its staff to about 17 people over summer months, and during winter months the staff carried out conservation projects, including planting and setting up pest traps along the Otago Peninsula, where it ran its tours.
"It is not tourism but we always funded it out of the business."
The application process involved answering a range of questions, including providing the percentage of international and domestic customers, he said.
About 97% of Elm Wildlife Tours’ clients were international tourists.
"We can’t survive on 3% of our market," he said.
The wage subsidy had helped the business keep staff on, but that would not last, although the company would continue to try to operate on demand.
Enterprise Dunedin city marketing manager Malcolm Anderson said it was not involved in the discussions or decision-making concerning which tourism companies received the funding.
An MBIE spokeswoman said applications to the strategic tourism assets protection programme had to show the business was a strategic tourism asset.
The criteria for that included a company providing information to support it was nationally and internationally recognised, a key asset for New Zealand or a region, and that without the business, visitation to the region would be significantly diminished, she said.
The ministry assessed the applications in consultation with Treasury, Tourism New Zealand, the Department of Conservation, and Te Puni Kokiri, in line with eligibility criteria and other assessment factors.
The Tourism Recovery Ministers group reviewed the advice MBIE provided and made the decisions, she said.