Body Positive chairman Bruce Kilmister said he felt the prize – five days for two adults at a resort – was "inappropriate" given the legal situation in Fiji, and the Government's attitude to people living with HIV/Aids.
"Fiji denies access to people with HIV/Aids," Mr Kilmister said today.
"Why would we encourage people to spend their money in Fiji when they discriminate against people living with HIV and Aids?
"I just note the irony."
While the 1997 Fijian Constitution guards against discrimination on the grounds of sexual orientation, consensual homosexual acts between adults are illegal under the Fijian Penal Code, the Marriage Act and the Family Law Act.
Those found guilty can be jailed for up to 14 years and subjected to corporal punishment.
Fiji has jailed tourists and locals for gay sex, and the brutal murders of the head of the Fiji Red Cross head John Scott and his New Zealand partner Greg Scrivener in 2001 gave rise to a campaign of homophobic innuendo from the Fijian police.
Mr Kilmister said several people living with HIV/Aids had contacted the organisation with their concerns about the competition.
When asked whether he would support an embargo on travel to Fiji, he said it was a personal decision, but he was "certainly in no rush to go".
In a statement published by the website, GayNZ.com, Reel Queer (the group behind the Out Takes Festival), said a boycott would not advance the cause of equality.
"While we recognise that there is a high incidence of homophobia and related persecution in Fiji. . . we also recognise that it is incumbent on the queer community to stand up and be present in the face of unjustified persecution," the group said.
The statement also noted that Octopus Resort did not discriminate on the basis of sexual orientation of its staff or guests, and deserved support for its work towards making Fiji a place where "Queer is normal".