Military police are investigating a group of New Zealand Defence Force personnel after Niue's only hotel was damaged following a late-night uproar, Stuff.co.nz reports.
The military say they will pay the repair bill.
The hotel, the Matavai Resort, was reopened two years ago after Foreign Affairs Minister Murray McCully directed $10 million in aid to get it up to international standard.
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It's regarded as vital to the efforts of both Niue and New Zealand to save the small island through tourism.
In a statement the NZDF said they had a "small number" of people in Niue at the end of last month to prepare for what they say will be a significant exercise later in the year.
"The NZDF can confirm that in the early hours of Wednesday July 2 it appears that fire extinguishers at the hotel where they were staying may have been let off by a member or members of the NZDF," the military said.