Alfresco dining is under threat with fears that a proposed 85 per cent fee hike for outdoor seating in downtown Queenstown will set a new national precedent.

A move to raise rents for pavement seating to between $125 and $185 per square metre in the town centre will cripple financially-burdened restaurants, the Restaurant Association of New Zealand says.

Restaurateurs have threatened to remove their outdoor tables and seating altogether in response to the proposed hikes from Queenstown-Lakes District Council. They say their outdoor facilities are a public service, adding vibrancy and aesthetics to their town.

The proposed fees could set a dangerous new precedent for the rest of the country, Restaurant Association CEO Marisa Bidois said.

"It's always a danger that this will happen. Often councils look at their neighbours when deciding what to charge," Bidois said.

Other councils' fees have so far been moderate. Christchurch charges about $110 per square metre and Wellington $85 in its CBD, and $55 elsewhere. Auckland charges an average $69 while Hamilton asks $20 per table. In smaller towns like Gisborne, there are no charges.

Business owners are unable to build infrastructure or connect water or electricity in the alfresco areas and therefore cannot understand the rationale behind the fee hike.

"It's unwarranted," said Grant Hattaway owner of Pier 19 and Captains Restaurant in Queenstown. "For eight months of the year it's cold, so people don't want to sit outside anyway."

Hattaway rents 128sqm of outdoor space. The proposed fees would make his annual bill $23,680. Removing outdoo seating would hurt the dining industry and tourism, he said. "We're the jewel in the crown of New Zealand tourism and we feel it's an unfair price hike.

"There's many places in New Zealand where the inside rate's not $185 a square metre."

Queenstown-Lakes' fee proposal follows a valuation by APL Property Appraisers. Restaurant Association members were invited to seek their own valuation, but it was not accepted.

A quote from Business Appraisals Ltd director Clyth MacLeod put the rental rate at $55 per square metre.

The Restaurant Association proposed a standard rate of $60 for downtown Queenstown, reviewable every two years and adjusted in line with consumer price index increases. Discussions are still before council.

Queenstown-Lakes District Council community services general manager Paul Wilson said the council is introducing a tiered approach after charging a standard rate across the district. Queenstown Mall will see the biggest hike of 85 per cent, he said.

The council disputes the validity of the valuation offered by the Restaurant Association and has asked for another one.

Hattaway says he is also battling rent increases of up to 10 per cent per annum.

The area has suffered a dip in international visitors with the economic downturn. Several businesses have gone under, including one of Queenstown's older restaurants, Beefeater Steak House.

"Some are feeling the pinch," Restaurant Association Southern Lakes branch president Cameron Mitchell said.

"We always have our Aussie skiers in winter, but we've lost the Americans and Europeans over summer."

- © Fairfax NZ News