Destination Queenstown chief executive Mat Woods made the comments after the government announced the $13.5 million accrued in the past year from the international visitors’ levy would be going into attracting an extra 72,000 visitors into the country over the next year.
"I have nothing against Tourism New Zealand. They're doing a brilliant job at what they're mandated to do, which is to induce demand.
"We acknowledge that the government is using the levy money for that, but we think of that as a short-term solution.
"Long-term, that funding should come from the consolidated funds which is tax or GST take and that [the levy] should be used for 50% conservation and 50% mixed-use tourism infrastructure, which is what it was originally set up for."
Mr Woods said he understood the announcement was part of a multi-pronged government approach to tourism.
"I'm optimistic that there is room in the tourism growth road map to look at both supply and demand.
"So if you think about at the moment we are generating demand which I understand as a country we need to be doing that because we're still at 86% of pre-Covid.
"Unfortunately in Queenstown that's not the case."
Mr Woods said Queenstown’s visitor arrivals were 145% higher than 2019, largely due to an increased flight network.
"First and foremost, domestic New Zealand has been visiting Queenstown and Wanaka, whether they're flying in or driving in.
"Secondly, we have great air connectivity ... the Australian market being our most important international market and so Queenstown is the only airport that actually has all four airlines — that's Air New Zealand, Qantas, Jetstar and Virgin."
Mr Woods said there was a need to look at infrastructure to sustain any more growth in the region.
"Infrastructure is one of those clear pain points that we have in Queenstown. You can really feel that — particularly around roading, for example.
"There's a lot of congestion at the moment so I think that's a really key issue."
He also called for a National Tourism Development Authority, which would analyse the infrastructure need across all regions.
"If you think about most other departments you always look at supply and demand. In New Zealand we don't do that. We just have Tourism New Zealand as the crown entity to create demand generation and they do a great job of that but how do we balance that at a nationwide level?"
Minister for the South Island James Meager said the legislation surrounding the visitors’ levy "outlines, I think, about four different criteria".
"So, it is rough split 50-50 conservation and tourism.
"And in the tourism space, it is both infrastructure but also marketing.
"It allows ministers to invest the funding in a way which best suits the current economic conditions, which is growth."
Asked whether the government should make a special exemption for Queenstown, Mr Meager said it was a "a good argument".
"It's not just the tourism picture though, isn't it? You've got 3million visitors, but you've also got a town which is growing rapidly and so you've got to accommodate all the transport infrastructure issues that are actually coming in from around Franklin, Ladies Mile, all the way up there.
"There's that big investment from NZTA going in at the moment. That will make a difference around the edges ...
"The issue is where do we get the money from? You get the money from growing the environment."
