Prof Derek Reid said over-development threatened the potential for Arrowtown to be a major tourism destination.
The town's "unique unspoilt" attractions of heritage and nature would be damaged by development which lacked the strategic implications of where the town was, where the community wanted to it to go and how the town got there, he said.
Those goals could be achieved only if the community spoke with one voice, he said.
In response, Arrowtown South representatives said the low-density estate would not directly impact on the heritage or tourism of Arrowtown.
Reports confirmed the development could be serviced by existing infrastructure.
Prof Reid was chief executive of the tourist board between 1994 and 1997 and is the visiting professor of tourism at the University Of Abertay, Dundee.
He has lived in Arrowtown for two years and divides his time between the town and his native Scotland.
He was asked to give his opinion about Arrowtown South, as someone with a tourism background, by Arrowtown Residents Group spokesman Peter Roberts.
Prof Reid had lodged a submission against the Queenstown Lakes District Council's plan change 39 for Arrowtown South and joined the group's campaign.
"I don't have a magic wand for the issues that face you here, but I can give some methodologies towards getting those answers," Prof Reid said.
"Arrowtown could be one of the jewels in New Zealand's tourism crown. At present, from my observation, it's a passing place for Queenstown and Wanaka and not a destination in its own right.
"I think if you go ahead with a major development without having the infrastructure to deal with it, you're placing at risk the very tourism industry the town needs.
"Your're looking at 215 houses; that's 430 cars. Most of those people want a supermarket and where's that going to go?
"I think you'll destroy the economic activity you're trying to protect . . . If someone said in Stratford-upon-Avon, `we want to build 215 houses', there would be an absolute riot."
Prof Reid recommended market research of Arrowtown's visitors to create a "multi-faceted tourism plan" which would create 50-week-a-year tourism.
The council could be one of the funders.
"Look at interpretations of churches, parks, artists, food and assets Arrowtown has. Tourists want individuality [and] you have to consider expansion against that economic generator."
Arrowtown South planner John Edmonds said Prof Reid was welcome to make any relevant comments on the plan change through the submissions process, but believed it was not appropriate to engage in discussion via the media.
However, Mr Edmonds said the Arrowtown South land was about 1km from the heritage precincts of Arrowtown.
It would not have a direct impact on the heritage of the town or its related attractions.
"The design guideline and consenting requirements in the plan change ensure that the zone will be consistently developed as the plans propose, to a very high standard.
"The walkways, open space and comparatively low density of development will merge this zone seamlessly with the rest of Arrowtown, taking development to the natural boundaries of the golf courses that are the town's `green belt'," he said.
Mr Edmonds said Arrowtown was already an internationally-recognised destination in its own right.
Growth and infrastructure issues raised by the professor were "incorrect or misleading".
