The move was confirmed at a special general meeting of council members on Monday.
The hotel council's regional chairpersons will remain in place and continue to represent the interests of the hotel members in their regions.
Members of the council will be integrated into the association, with the association providing a new dedicated hotel sector resource.
Both association and council members will retain all the benefits and services they currently receive, and further enhancements will be developed in coming months.
Penny Clark, the Queenstown chairwoman of the hotel council, also general manager of Goldridge Resort, said the merger into the so-far unnamed organisation would not make a huge difference for the 18 Wakatipu members at the grassroots level, as they would continue their regular meetings.
"Certainly, our relationship with TIA is going to improve no end and certainly we're going to get more clout in the bigger sense," Ms Clark said.
"I think we're at least leading the way when it comes to showing more efficiencies because the tourism industry has so many voices that it's very hard at the Government level to know who've they've got to listen to."
Asked if Queenstown hoteliers were likely to push for any concessions in the event of the shake-up, Ms Clark said she thought members were waiting for the process to settle down and would probably discuss the merger at the meeting today.
Association chairman Norm Thompson said forming one organisation would strengthen tourism industry representation at the national level.
"The integrated organisation will create unified, highly focused leadership for our industry.
"A strong hotel sector is vital to a thriving visitor economy.
"Together, we can deliver even better outcomes for our members."
Council independent chairwoman Jennie Langley said the tourism industry was diverse, but needed to speak with one voice to the Government.
"We can make positive changes for the tourism industry, but only by working together can we shape our future.
"A collective approach is much stronger and more effective."
Discussions with other tourism industry organisations were also under way, with a view to finding further opportunities to integrate, they both said.
