Hotel revival taking longer

ALAN WOOD
Last updated 05:00 24/11/2012

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Reopening dates for properties in the central city continue to be pushed back, a major hotel is for sale, and international hoteliers are hunting for land to build on.

Those in the industry are now examining the city's recovery and what it means for them.

The Novotel off Cathedral Square has delayed its opening until September 4 next year, and other hotels in the area have also postponed first bookings.

One weighing up what the future holds is Peter Knight, the longtime operator of the Latimer Hotel, which is now being rebuilt. He says there have been approaches from international hotels, and it might well be a good time for him to sell.

The Singaporean directors of the company behind the demolished Hotel Grand Chancellor are also examining whether to rebuild, and will fly to New Zealand later this month to discuss options.

Some in the industry suggest it will be a long haul back for still cordoned-off central city accommodation, hampered by unknowns in the Christchurch Central Development Unit (CCDU) city blueprint and council plans.

These include how the convention centre precinct will evolve, the survival of the Town Hall and its impact on the evolution of nearby blocks surrounding Victoria Square.

Talks between insurers and hotel property owners are far from finalised, and some hoteliers remain wary about commenting on the future of properties they have managed.

More certain than some about the future of its properties is the French Accor chain.

It reopened its Ibis Christchurch hotel on September 4 this year, the two-year anniversary of the first Canterbury earthquake.

The Ibis has been a major confidence boost for the sector, shaken to its knees since the February 22, 2011, shock.

Accor Asia Pacific spokesman Peter Hook says the Ibis and the Novotel hotels are now being promoted through European trade shows, including an upcoming March ITB travel expo in Berlin, the world's biggest.

That expo hosts tens of thousands of people and there would be a natural curiosity about Christchurch, he says.

The Novotel hotel in Cathedral Square has a multimillion-dollar repair job under way.

The reopening could happen before September 4 next year but that date is important as an anniversary of the first quake, Hook says.

The Ibis on Hereford St has proven more than viable in the two months since opening, hotel manager Tim Dearsley says.

"Our first month's occupancy was on par at 46 per cent, but the second month grew to around 70 per cent, with groups and leisure guests joining the business travellers," Dearsley says.

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By the time of the planned reopening of the Novotel in September there will be significant demand by large international groups, with some arriving or due from AAT Kings and Contiki operators.

Hook says decisions are still to be made around the chain's All Seasons Hotel in Cashel St formerly owned by property developer David Henderson and called Hotel So, and also at the All Seasons hotel in Papanui Rd.

"The things that we have learned that initial ideas of being able to get properties back in operation have generally taken longer than we expected," he says.

Ernest Duval, owner of the 22-storey Pacific Tower, home of the Rendezvous Hotel, says he is still pushing for a reopening about February 22 next year, the second anniversary of the most damaging quake.

Repairs included replacing some of the stressed steel links in the structure. The contractor reports they are on track for a handover of the hotel to the Rendezvous owners on or before February 22.

"They are working extended hours seven days a week and have managed to stay ahead of programme with the link replacement and exterior painting," Duval says.

Rendezvous Hotel general manager Brad Watts has been working in China for the hotel chain. He says he recently met in Shanghai with agents from Taiwan who are keen to see more hotels open again in Christchurch, mainly because many international departure flights leave Christchurch early in the morning.

Bruce Garrett, Tourism Industry Association regional chairman, hotels, says that though there have been delays, and talks with some property owners and insurers are ongoing, he sees a healthy future for the hotel industry if reopenings are staged.

Before the earthquakes about 3800 rooms were available in Christchurch but that number has been reduced to 1000 or so. New projects include the 140-room Latimer, off Latimer Square, and a 20-room extension at the Copthorne Hotel Commodore near the airport.

"The demand's there. As the hotels reopen, I think we'll see people start to return. There's a lot of tour companies just waiting for hotels to open," Garrett says.

Knight says international hotel operators have approached him about the 4 -star Latimer Hotel which will be opening in a staged process during next year, first with a restaurant and conference facility due to open in April-May, then with rooms to open from June. The rest of the hotel rooms are due to be completed by the end of the year.

Last year at the consent stage of the project Knight said he was planning a $25 million hotel, including foundations.

This week he did not want to place a sale price on the five-storey hotel build but says the foundations have been expensive, with $2 million spent on piles.

He has put extra money into the project above the insurance cover.

"It's going to be the only fully compliant, proper 100 per cent engineered hotel in the city for some time," he says.

Part of his reasoning behind a potential sale was the commitment needed to the hotel. In his late 50s, he wanted to loosen some of the ties of running an operation 24/7 as he and his family had for more than 40 years.

He has drawn "a line in the sand" and if a sale does not happen by a certain date he needs to "commit" back to his role.

At this point the new building project offers a clean sale with insurance and engineering issues sorted out, and staffing and other contracts open.

Representing Knight in the sales process is Dean Humphries, executive vice president of real estate firm Jones Lang LaSelle, who says it was decided a few months ago that it is an opportune time to sell, given a tightly held market.

"We've got expressions of interest closing [this week] . . . we've had a sound level of inquiry certainly," Humphries says.

"There's been a lot of hotels that have either been demolished or still pending decisions on what's to happen, so there's a lot of what you might call dispossessed owners or owners that are looking at options there in Christchurch."

Given the demand for rooms after the demolitions, Christchurch has become the second-highest-performing hotel city in Australasia behind Perth, based on combination of occupancy and room rates.

"The past 12 months saw a growth in (revenue per available room) of just over 11 per cent, so it was certainly the strongest in New Zealand by a country mile," Humphries says.

"If you talk to most people working in the industry the short medium and longterm outlook is very, very positive . . . the biggest problem at the moment is the time it's taking to get rooms back online."

Steve Martin, general manager with Christchurch's Hotel Grand Chancellor before its demolition due to the quakes, says there is the potential to rebuild on the Cashel St site.

Directors associated with the Singaporean Hotel Grand Central group will be in New Zealand later in the month, with further discussions planned on the Hotel Grand Chancellor site and a possible decision in the new year.

"We're looking at it at the moment, a few different options. It's still quite early on in the piece I'd have to say."

Martin is now general manager at Wellington's James Cook Hotel Grand Chancellor.

Heritage Christchurch's general manager Gary Jarvis says he does not want to give an update on two properties on Cathedral Square at this point.

In September, The Press reported the Heritage Christchurch Old Government Building (OGB) was due to reopen in March.

The future of the Heritage's main "tower block" building behind the OGB was undecided, given talks between the owner and insurers.

Millennium & Copthorne Hotels NZ managing director BK Chiu says he would like to see the 178-room Millennium Hotel Christchurch in Cathedral Square operational as soon as possible.

But a repair process will take 18 months.

The listed company had lost its Durham St operation and was talking about its Copthorne Hotel Christchurch Central property in Victoria Square with the CCDU.

The Victoria Square site has been earmarked for a possible arts precinct.

The hotel operator would like to end up with at least one or two hotels in the central city, but any new investments would have to stack up.

"We want to be back in Christchurch. Christchurch is important for our whole network in New Zealand."

Chris Black, general manager of hotel development at Rydges in New Zealand, says the Japanese owners continue to work with insurers on the property on Oxford Tce.

When talks are finalised there will be about 18 months of repair work on a building that is structurally sound and "probably one of the strongest buildings in Christchurch".

- BusinessDay.co.nz

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