"For every bad review left on any website, the group organiser will be charged a maximum 100 pounds per review."
The hotel has since said it would refund the money.
Hospitality New Zealand chief executive Bruce Robertson -- whose group represents more than 2400 businesses including restaurants, bars, hotels, motels and cafes -- said internet reviews were like "word of mouth on steroids".
He said fining customers for negative reviews was not standard practice in New Zealand, and as far as he was aware it had never happened here.
Mr Robertson said internet reviews were an ongoing issue and were especially challenging if they were malicious.
"The industry is certainly well aware of a need to be proactive in managing any adverse reviews in the most constructive way they can.
"That can be difficult if they are malicious."
He said the best response for those in the industry was to promote services accurately so that customers knew what to expect.
"There is no point saying you're a five star when you are a two and a half star -- people will have a disappointing experience because their expectations aren't going to be met.
"Your advertising promotion needs to accurately reflect what people experience, and if you deliver that experience you're less likely to have adverse reviews."
Co-owner of Nikau Cafe in Wellington, Paul Schrader, said in this day and age it was a lot easier for critics to be harsh online.
He said while it might seem like a satisfying way of dealing with negative comments, the idea of fining customers or guests was "absolutely ludicrous".
"People have always been critical -- it's just in the day and age of the internet it's much more public."
After receiving a critical review on a website, Mr Schrader said he felt slightly deflated and the cafe came up with its own unique way of dealing with the negative comments.
Mr Schrader said they had a friend design t-shirts with some of the quotes from online reviews printed on them, which staff wore.
"You feel aggrieved and possibly sometimes angry because you know you're trying your best ... you get the feeling they don't actually understand how much hard work goes behind the scenes.
"It felt like we were taking ownership of it."