Some Queenstown businesses fear a new bed tax could ruin their livelihoods.
The bed tax is a proposal Queenstown Lakes District Mayor Jim Boult has been campaigning for to help pay infrastructure costs for the burgeoning tourist destination.
However, opponents of the tax say the cost could drive people away from staying in the town.
Villa del Lago owner Nik Kiddle is taking a stand against the bed tax.
"The bed tax, as it's currently proposed by the mayor, would in fact increase costs for particularly small and medium sized accommodation service providers to an extent that would probably bankrupt us," Mr Kiddle said.
"People are genuinely concerned for their businesses and their livelihoods."
The tourism industry strongly opposed the new tax, as it would raise prices and discourage tourists from staying in commercial accommodation, Mr Kiddle said.
Mr Boult previously suggested a $10 per bed per night additional cost for visitors as an option.
That could translate to hundreds of dollars extra for family groups planning to stay more than a couple of nights, Mr Kiddle said.
In response, he sent an open letter to the mayor earlier this month, calling for Mr Boult to ditch the tax and instead put his hand up for 15 percent of the GST generated by international visitors to Queenstown each year.
The proposal needs to be in writing and have a formal consultation process, Mr Kiddle said.
He has been invited to meet with Queenstown Lakes District Council chief executive officer Mike Theelen on Friday.
However, Mr Theelen was quick to point out no details have been ironed out.
Queenstown was a "canary in the cage" when it came to tourism, he said.
"We certainly don't want to keep adding more burden onto ratepayers to support that industry," Mr Theelen said.
"We need to look for fresh ways of doing that. A bed tax is a well known, internationally recognised tool for that."
A tax would be spread across all accommodation providers, he said.
The proposal would likely not be discussed properly until after the government finished consulting on its tourist tax.
The idea of a bed tax came up seven years ago - and the response back from hoteliers back then was lukewarm.
Hospitality New Zealand Central Otago accommodation sector group chairperson Bridgit Parker said members were hesitant about the proposal.
She did not rule out a bed tax, but said any proposal needed rigorous discussion between all stakeholders involved.
Queenstown Chamber of Commerce chief executive officer Ann Lockhart said tourist numbers have grown to the point that finding a solution was "extremely urgent".
There were three contenders for who would help foot the bill for increasing infrastructure costs - the government, ratepayers or visitors, Ms Lockhart said.
So far there is no firm timetable to bring in a bed tax, but the local industry wants more discussion and consultation before anything is decided.