The Tauranga City Council has paused looking at developing a convention centre and hotel.

The move comes as central government directs councils to "rein in the fantasies" and get back to core business.

In March 2024, the city's commissioners (who ran the city at the time) approved the preparation of a business case to "fully examine the costs, risks, and benefits" of having a hotel and conference centre as part of Te Manawataki o Te Papa.

Developing a business case were anticipated to cost up to $200,000 and there was existing budget in the council's Long Term Plan to cover the cost.

The findings of the business case were to be reported back to the council in the second half of this year.

However, on Thursday, council confirmed that developing the business case was on hold.

"Work on preparing the business case is on hold while we investigate funding opportunities for the project," said the council's general manager of city development and partnerships, Gareth Wallis.

Wallis said council wanted to wait until it knew more about these funding opportunities before committing to work that might not be needed.

A summary of development costs for the proposed hotel and conference centre was estimated at over $147 million in March. A report to the commissioners said that the success of the conference centre would be dependent on new hotel supply.

"Establishing funding for the conference centre is likely to provide investor confidence, thereby encouraging private sector funding for the hotel development."

The council said it was exploring a wide variety of central government and private sector funding opportunities and wanted to pause the business plan until it knows which pathway it might want to pursue.

"There's no point spending ratepayer funds on developing information that might not be needed," a council spokesperson said.

New mayor Mahe Drysdale said he supported placing the business case on hold until the council knew more about how a hotel development could be funded.

"From the outset, this was envisaged largely as a private sector investment opportunity, with Council's involvement being as a facilitator and the landowner."

2019 Statistics New Zealand data showed that Tauranga was far behind neighbouring cities when it came to the number of hotel rooms available, having 494 compared to 687 in Hamilton and 1828 in Rotorua.

In March 2023, property development and investment partner Willis Bonds prepared a report for the council which identified that when it came to hotel space in the city there was "current evidence of market failure, where the private sector is unable to fulfil a public need."

-RNZ