As part of its annual budget, Auckland Council wants to shift the funding of Ateed from ratepayers to 330 accommodation providers, ranging from backpackers to camping grounds to big hotels.
Auckland mayor Phil Goff says the accommodation sector has profited from the boom in tourism and increased room rates so it was fair it should pay for Ateed rather than ratepayers.
Money saved could be redeployed to fund infrastructure such as roads, which also benefited the tourism sector.
But the accommodation sector says it has been unfairly singled out and should not be the only sector of businesses to pay for the cost of Ateed.
In its submission it says that it gets 9 per cent of visitor spend in Auckland but is being asked to fund 100 per cent of council efforts through Ateed to increase this spend.
On average rates will increase 150 per cent for the affected accommodation providers and in some cases by more than 300 per cent.
The TIA says over half of Ateed's spending - $14.4m - is on promotion believed to include the World Masters Games, the NRL Nines, the V8 races and about two dozen other events.
"Ateed and the council have provided no breakdown of these events in terms of their costs, revenue generated or the split between Aucklanders and non-Aucklanders."
In its budget consultation document, the council says it is difficult to quantify the impact of Ateed's investment in its events programme separate from other actors.
However, an evaluation of the economic impact of the events which Ateed's programme contributed to in 2015/2016 showed 124,550 additional visitors, 262,980 additional visitor nights and $44.7m in additional tourism expenditure.
Ateed says Auckland's visitor economy delivered more than $7.3 billion to the region in those years, and is well on track to achieving the Auckland Visitor Plan goal of $8.24b by 2021, just five years into the 10-year strategy.
TIA - the country's main tourism industry organisation - says the events Ateed delivers directly itself are primarily for the enjoyment of Aucklanders and are not drivers of visits by those coming to the city. These include Diwali, the Lantern Festival, the Waka Festival and Pasifika.
Other events Ateed supports such as the Santa Parade, Auckland Writers Festival and Takapuna Beach Cup are also for Aucklanders and result in very little increase in demand for commercial accommodation, says TIA.
"There is a clear disconnect between those who are now being asked to pay - the commercial accommodation sector - and those receiving the primary benefits - Auckland residents."
TIA says more events that Ateed subsidises would almost all take place without the council-owned agency's involvement.
These include All Black tests, pop concerts, golf, yachting, tennis and running events.
"What needs to be determined is: what additional visitor spend is generated in Auckland from each event as a result of Ateed's involvement?"
The budget has to be in place by July and Goff has signalled there may be room to modify the proposal. During a hearing last week councillors heard that motels and other smaller businesses on the fringes of the city were particularly hard-hit by the plan.
