An email announcing the closure sent to those in the industry said it would take effect from January, and was the result of a range of factors, including Government funding cuts.
Larnach Castle director Norcombe Barker said the cuts showed a lack of appreciation of what had been the country’s biggest export industry before the Covid-19 pandemic.
Despite the recent scare to the industry, he believed it was a field in which young people could forge a career.
"It’s incredibly disappointing because we are crying out for people in the tourism industry," he said.
Those at the castle worked closely with the school and its closure would make it harder to hire suitable people.
"It means that people don’t have a real understanding of tourism — they’re not trained up properly and we have to do the training."
The email sent by the school to tourism providers said the level of funding private training establishments such as the tourism school could receive was changing in 2023.
"We did indicate to government and regulators the impact the reduction in funding would have. However, unfortunately this did not change their position on funding."
A third reason given in the email was the general downturn in tertiary education enrolments because of rising inflation and labour shortages.
A school spokesman said two staff members in Dunedin would lose their jobs, despite its focus on redeploying affected staff.
There were 29 students enrolled at the Dunedin campus, the spokesman said.
The school’s Rotorua campus is also closing.
New Zealand School of Tourism chief executive Ana Maria Rivera said the "very difficult decision" was due to the introduction of a new funding system under the reform of vocational education.
It was also due to low student enrolments at the campus.
Interest in studying tourism had increased in other places such as Auckland and Wellington since the pandemic, but in Dunedin there had been a decline in enrolments for several years.
"The campus could not sustain both a reduction in government funding and continued low student enrolments."
The current immigration setting had also affected the international student pipeline, she said.
The campus would teach all current students through to the end of their programme.
"We are incredibly sad to be closing the doors of this campus."
