Auckland Council is a step closer to reinstating its controversial hotel bed tax after the Supreme Court ruled in its favour.

A targeted rate was introduced in 2017 as a way of raising money for its tourism and events arm, Auckland Tourism, Events and Economic Development.

The Super City's governing body wanted to overturn a Court of Appeal decision from 2021, where it was ruled accommodation groups like the Copthorne and Millennium hotels were only receiving a small amount of funding.

Today, the Supreme Court ruled in favour of the council, meaning the legislation can be reintroduced, but will have to go through consultation.

Auckland Council chief executive Jim Stabback said appealing a judgment of the Court of Appeal was not a matter that the council took lightly.

"We are pleased that this decision gives us clarity to consider our future options.

"This decision fully endorses the approach taken by the council and emphasises that, provided we meet necessary process requirements, as we did here, the funding tools available to us may be used in this way."

The Accommodation Provider Targeted Rate (APTR) previously funded 50 percent of Tātaki Auckland Unlimited's destination expenditure, particularly on visitor attraction and major events.

The rate was suspended, and associated expenditure reduced, when borders closed in 2020 due to the Covid-19 pandemic.

The levy cannot be reintroduced in the Annual Budget 2023/2024 but could be considered as a funding option in the 2024-2034 Long Term Plan.