Hotel hopes ride on Asian money
Asian property investors will be targeted to build hotels for the damaged Christchurch accommodation sector.
Tourism boss Tim Hunter says overseas investors are needed, with not enough interest shown by local investors.
The city's hotels were offering high yields that created an opportunity for further investment, and were the best performing in the country, Hunter added.
The chief executive of Christchurch & Canterbury Tourism (CCT) will travel to Kuala Lumpur, Malaysia, to woo SouthEast Asian investors at a property investment seminar scheduled for March 11.
"I will be doing a small presentation on what the recovery path for tourism looks like, and show them some of the stats in terms of what hotels can earn in the current environment in Christchurch," Hunter said.
"And also what markets will come back the fastest, so they will get a sense of those high yield or low yield tourist markets that are going to drive the growth in hotels."
Christchurch suffered the loss of a big chunk of its hotel rooms as a result of the 2011 earthquakes.
The Ibis Christchurch reopened on September 4, 2012, and the Heritage Christchurch's Old Government Building (OGB) wing is to formally reopen on May 13. Other properties including the Rendezvous and Latimer (under construction) hotels are respectively due to open in May and September, according to CCT estimates.
"After two years we've only really had one new hotel under construction. That's really not an adequate response to such a shortage of supply," Hunter said.
"I think if the local investors aren't going to get off their chuff and put some money back into hotels, then we've got to go and find it internationally."
The number of hotel rooms in the city should increase from 1325 as of December 2012 to almost double the number at 2627 by December 2015, he said.
While the Canterbury Earthquake Recovery Authority had been focused on local or domestic investors, his view was that international investors also had to be bought into the mix. "There is a lot of capital available out there in the international market, and we feel we should be talking to people in Asia, particularly when it comes to hotel opportunities in Christchurch because we now lead the country in terms of yield, also in room occupancy and even revenue per available room," Hunter said.
The average daily room rate in Christchurch in the year to November 30, 2012 was $151. This compared to lower rates in Wellington, $142 a day; Queenstown, $141; Auckland $135; and Rotorua at $101 a day.
The Garden City hotels also had 82 per cent average occupancy in the year to November, 30, better than Auckland at 76 per cent, Wellington at 73 per cent, Rotorua at 64 per cent and Queenstown at 62 per cent.
International Airport visitor and trade development manager Mel Wong will travel to Kuala Lumpur to be part of New Zealand Week, established by the New Zealand High Commission in Malaysia.
This year's week would be focused on the rebuild of Christchurch, and investment opportunities in the city.
Wong will update Malaysian trade representatives on progress being made at the airport in its efforts to grow the market.
A spokesman for the Canterbury Earthquake Recovery Authority and CCDU said Cera had been approached about participating in the trip to Kuala Lumpur but had decided against it.
"Cera is open to all opportunities to attract the interest of international investors in the Christchurch rebuild."
HERE TO STAY
Hotel average daily room rates and occupancy rates for the 12 months to November, 2012:
Christchurch: $151 a day; 82 per cent occupancy
Auckland: $135 a day; 76 per cent occupancy
Wellington: $142 a day; 73 per cent occupancy
Queenstown: $141 a day; 62 per cent occupancy
Rotorua: $101 a day; 64 per cent occupancy
FOREIGN INVESTORS CONSIDERING LATIMER HOTEL
Asian investors have already eyed up the Latimer Hotel, which is being rebuilt by longtime operator Peter Knight and marketed for sale.
Knight yesterday said he was pressing on with the rebuild of the 4-star Latimer Hotel, which is due to open in stages during the year.
The first stage of the $25 million project is a restaurant and conference facility due to open in April-May. Rooms would open from June with 140 rooms at completion.
Knight, who is in his late 50s, wants to either loosen his ties to running a 24/7 operation or recommit back to the role if a sale does not happen.
Representing Knight in the marketing of the property is Dean Humphries, executive vice president of real estate firm Jones Lang LaSalle, who says the Latimer has seen "pretty strong interest" from both Asian and Australian investors.
"We're continuing with discussions with a number of parties . . . I'm based back in Auckland (but) we're heavily involved down there," Humphries said.
"We can obviously see there's a huge demand for the hotel rooms that are there at the moment."
The real estate firm had taken investors through the property over the past couple of months.
"The interest is there," he said, noting the Christchurch hotel sector landscape had changed significantly. There had been a swing from leisure to corporate customers meaning that stays were less volatile over the course of a year.
"You can't base values on where things were. So of course it's looking forward and understanding the cashflows, and the sorts of things investors are going to want in this new landscape."
There were still uncertainties around the number of damaged hotels that would be repaired or remediated and come back online, Humphries noted.