Hoteliers look at investment options

01:22, Aug 17 2014
Convention Centre
ANCHOR PROJECT: An artist's impression of the new Convention Centre, which will be designed and built by Plenary Conventions, Ngai Tahu Property and Carter Group.

Hoteliers are circling Christchurch and its planned new convention centre, some making decisions as to the best time to invest tens of millions in new accommodation.

The $500m convention centre, with 2000 seat capacity as outlined by Gerry Brownlee and John Key earlier this month, has already proved a confidence booster for the hotel and tourism sector.

The convention precinct will run from Cathedral to Victoria squares. Nearby there is already significant work under way by developers and hoteliers to bring back rooms to the city.

But some hoteliers say it is too early to commit to a rebuild.

International group Millennium & Copthorne Hotels NZ and New Zealand-owned Scenic Hotel Group are two that want new properties in the central city but say that right now is too early to put pegs in the ground and bring in the construction crews.

Rydges, which already manages a hotel in Latimer Sq, is also "possibly" interested in extra sites.


The February 22, 2011 quake and that year's series of earthquakes saw mainstream hotel rooms in the city fall to around 750. But they have been building since.

Bruce Garrett, the Tourism Industry Association's (TIANZ) Canterbury hotels sector chairman, said a year on from February 22, numbers had recovered to 1000, where they sat for 18 months or more. Then in the last 12 months a further 500 rooms were added to take the total in major hotels to 1500.

"We've had nearly a 50 per cent increase in the numbers of rooms available this summer compared with last summer, so we need to be increasing the number of people coming in - we've got more beds to fill."

In the next year or so, he estimates at least 500 rooms will be added according what plans are already in the public arena.

Garrett says there is "definitely a danger" of too many rooms ahead of a recovery of international tourist numbers into the city. So far in the winter months, occupancy in the major hotels has been down to about 60 per cent in 2013 from about 70 per cent in the 2013 winter period. "In June we were 59 per cent, (while) Auckland was 75 per cent, which helps put it in a bit of perspective."

Forward bookings for summer were looking OK for the Christchurch industry, and February should be helped through the city being involved in the hosting of the Cricket World Cup 2015. "(Overall) we're picking there will certainly be growth on the number of rooms sold last year, but still probably not as much growth as there has been in the number of rooms online. We're still expecting the occupancy levels to be lower."

Christchurch Airport chief executive Malcolm Johns says while the "rest of the world" has started to come back to Christchurch in the recovery period, Australian numbers are significantly down.

Garrett says the convention centre will provide a "little bit of impetus" to confidence and the attraction of visitors in the run in to the planned 2017 opening.

"I think . . . the location is fairly central to a number of existing hotels and where a number of hotels are being planned. And undoubtedly there will be another couple of hotels built around it . . .

"It's not just convention centres that benefit from having convention guests around, it's hospitality, retail, transport and all the providers. So from the hotel's perspective it's our linen providers, our food deliveries . . ."

He points out that the centre appears smaller than that originally outlined by Key, who in 2012 pointed to a larger complex able to host 3000 people. It will include a 2000-seat conference facility, hotels, residential development, hospitality and retail.

Global hotel group Accor had been selected as the preferred operator to run and help plan the $500m centre. The French-based Accor already has a sizeable presence with its 155-room Ibis and 154-room Novotel hotels, some of the early reopeners..

Accor is upbeat on what will be offered at the new precinct, putting up its experience in other sites including the Sydney Convention and Entertainment Centre.

However, others in the industry wonder about running a convention centre and the costs of big complexes, including power, rates and marketing bills.

Accor New Zealand and Pacific senior vice-president Garth Simmons says new Accor hotels in or near the precinct are "a desire", but he will not detail those yet.

As preferred operator for the convention centre, Accor would spend coming months on a master- plan process with the Government and developers. The precinct would need to be interactive and help energise Christchurch as a whole, Simmons says.

"We expect to have further investment in Christchurch, not just monetary, but emotionally and people-wise."

Accor also manages 500,000 square metres of convention and exhibition space spanning counties located in the Middle East, Asia, Europe and India, and has contacts around the globe. "It is business orientated skills (we provide including), specific skills relating to the incentive market as well, Simmons says.

New hotels were certainly part of Accor's plan, and the company would be catering for the national tourism and conference market also. But "any development would need to make economic sense".

Scenic Hotel Group director Lani Hagaman says the convention business can be very tough, as experienced by her group's management of business into the Marlborough convention complex, leased from the council.

The Scenic chain, with brands including Heartland and Scenic hotels, which suffered the loss of some properties as a result of the quakes, is looking to re-establish back in the core city, but only when the timing is right.

She, like others she spoke to, took the view that the recovery of the central city would be a much longer process, in the order of 15-20 years rather than 5 to 10. Within this context there was a danger of an oversupply of rooms, much like that which hit Christchurch from 1996 that had led to hoteliers suffering. The timing for a re-entry had to be right.

"We're still keen to come back into the city. We've investigated a couple of sites and a couple of (talks) haven't resulted in us securing those," Hagaman says.

"But I've still got agents looking around, and still very interested to find the right location."

Managing director of NZX- listed Millennium & Copthorne Hotels NZ, BK Chiu is another looking at the timing of a rebuild, noting reports that some hotels in the CBD are "not doing too well", that the city remains a construction zone.

He says the chain will re- establish a Christchurch's Copthorne Hotel on the Victoria Square site where the previous Colombo St hotel was demolished as a result of the quakes.

"We will in the end rebuild on that site. It's good that [the site] is not going to be acquired [by the Government] . . . it will probably be a four to five star hotel," Chiu says.

"Now the question is timing. Christchurch is important to us, but beyond that, when is hard to say."

There is no progress on Millennium & Copthorne's other previously leased Millennium Hotel Christchurch in Cathedral Square.

Quake hit properties that have returned include the 171-room Rendezvous, the Novotel and the Ibis. The first major rebuild was the 138-room Rydges Latimer.

The other longstanding Rydges property at 170 Oxford Tce in the city is no longer carrying the Rydges branding, with its lease on the building having expired. It is understood the Japanese owner of the building is in a legal dispute with the building's insurer.

Rydges Hotels & Resorts general manager of hotel development for New Zealand and the South Pacific Chris Black said the convention centre was the "most important decision made" in the regeneration of hotels, hospitality and inner city living particularly within the frame area.

"The quicker (details) get announced the quicker we can start selling Christchurch as a convention destination. It will give private equity a lot more confidence to start investing in the CBD, which I think has been pretty slow coming." Asked if Rydges could re-establish other sites in Christchurch in future aside from Rydges Latimer, he said "possibly".

A newer development is the Hotel Montreal on Montreal St, the former Chateau Blanc apartments that are being upgraded by developer Lilly Cooper. Set to open at the end of September, the property will provide 25 hotel rooms, most exceeding 50 square metres and each with their own balcony.

She has started employing staff including consultant Lucy Gain. Gain says Cooper loves the nearby George hotel, and saw the opportunity to create an upmarket boutique property. Other features will include a Argentinian-style polo bar, a cafe and outdoor cinema.

TIANZ's Garrett says there are plenty of other hotel development's in the city that will help the industry. Approximate opening dates include October for an initial 25 rooms at Hotel Montreal, 44 rooms at the Ramada Suites by early 2015, and 88 rooms at the CoSa Hotel in the first quarter of 2015.

Another 280 rooms will become available with the reinstatement of a Cashel St property formerly known as Hotel So and then the All Seasons.

Other possibilities include an 80-room boutique hotel on Moorhouse Ave near Christchurch's old railway station site, while Antony Gough's Terrace project in the city could include a boutique hotel.

Forsyth Barr House, Christchurch's tallest office tower, has been under offer to a developer who wants to convert it to a hotel.

Garrett said was aware the tower owner was talking to international hotel companies. But no new brand to run the hotel had been confirmed yet.

Ernest Duval said he was doing investigative work on behalf of a majority owners of the 50 room "Fino Casmenti" Kilmore St property, previously run by Scenic Hotels on behalf of individual investors. With those investors having sold he was now working on behalf of the new owners to establish how much strengthening of the building was require and how much that might cost.

Hotel or apartment accommodation are two options for the site, Duval says. "So the ground floor has been dug up, piles exposed and examined, we're still at that (early) stage." He was the property developer behind the building 20 years ago.

Christchurch and Canterbury Tourism's Caroline Blanchfield says there are still a number of inbound tourism operators that bring international tourists to New Zealand for bus tours avoiding Christchurch.

They are still not comfortable with the amount of accommodation for these larger groups, she says.

However, Ibis Christchurch hotel manager Tim Dearsley says some tours are back already with an ongoing refilling of the central city. For example, in the order of 18 Government departments would be moving back along with retail projects such as Nick Hunt's Cashel Square, Antony Gough's The Terrace and the Triangle Centre. "I'm personally very confident."

The Press