44 rooms should have been built
Scenic Circle Hotels has failed to meet the conditions of its agreement to manage the Marlborough Convention Centre.
Marlborough District Council is negotiating with the hotel over the conditions not met.
Scenic Circle was awarded the contract to manage the convention centre in 2007, after promising to upgrade its hotel in Henry St and to add 44 extra rooms on to the property.
Council chief executive Andrew Besley said on Friday that while Scenic Circle had upgraded its existing 56 rooms and the public areas of the hotel, as required, it had not provided another 44 rooms.
The hotel had resource consents to do the work, putting the rooms on the northeastern side of its block, for about a year, he said.
"The council is in discussions with them at the moment. The lease goes to December 2013, and council is in discussions about whether they are going to meet the total requirements or not."
The resource consents were valid for another four years, Mr Besley said.
Scenic Hotel Marlborough general manager Brett Inkster referred the Marlborough Express to Scenic Hotel Group managing director Brendan Taylor, who could not be contacted for comment.
Mr Besley said he expected the discussions would take "a few months" to complete. "We need to understand their position and what the options are for the council."
He said there were other potential operators. "The issue here is to provide an incentive to provide more hotel rooms."
Another requirement was that whoever operated the Alfred St convention centre needed to be involved in marketing it nationally.
Bookings looked quite promising, even in these tough times, Mr Besley said.
"It can take 18 months to two years lead time to organise conventions. They're not something people want to do next week.
"Scenic Circle have ensured the convention centre has a good market reputation." Scenic Circle had done well operating and managing the convention centre. They had to fit out the kitchens and provide audiovisual gear for the centre as part of the contract.
"Also, the other thing to remember, this arrangement came before the global financial crisis and the Christchurch earthquakes, times are a fair bit tougher."
- The Marlborough Express