By Stephen Wright 

WELLINGTON, New Zealand--New Zealand is moving toward ending quarantine in state-approved hotels for travelers to the country who are fully vaccinated against Covid-19.

From mid-November, New Zealand will halve the current 14-day quarantine, as a first step in opening the country's border, the government said Thursday.

New Zealand closed its borders to all but citizens and long-term residents in March 2020 as the pandemic unfolded. In practice, the limited number of hotel rooms available for quarantine meant many New Zealanders were unable to return home. The restrictions also were a financially debilitating burden on the tourism industry and companies such as Auckland International Airport Ltd. and Air New Zealand Ltd.

The government said it is aiming to introduce home isolation for arrivals from early next year at the latest.

"This option will be made available to increasing numbers of fully vaccinated travellers in the first quarter of 2022," it said.

The quarantine system has become increasingly contentious as vaccination rates increase and after the government called it quits on a strategy of stamping out Covid-19 in New Zealand. The number of Covid-19 cases in the community is now far greater than among arrivals in quarantine.

A New Zealand court on Thursday ruled that officials must reconsider their refusal to allow a businessman to isolate at home after a planned trip to the U.S.

Under the transitional arrangements, people who leave state quarantine after seven days would isolate at home for a further three days while awaiting a negative Covid-19 test result. They would also be tested three times while in quarantine.

The government also said that from Nov. 8 it will expand eligibility for quarantine-free arrival from a small number of Pacific island states that have been free of Covid-19.

Write to Stephen Wright at stephen.wright@wsj.com