Thursday, July 23, 2009

Four-star hotel deal for Auckland Airport, Tainui

In our post HERE, we wondered why Tainui would be contemplating to develop a luxury $80 million hotel at Auckland Airport in this economic climate.

In today's NZ Herald it was reported that plans have been scaled back somewhat and it is now proposed to invest in a $65 million four star Novotel hotel in time for the rugby World Cup.

Tainui would be lead developer and investor in the joint venture, with Auckland Airport holding a minority interest. The hotel would be developed on a long term ground lease granted by the airport and would be managed by Accor.

Accor appear to be in the box seat in this deal by not committing any funds and exposing themselves to no risk. They will simply provide management services by running the hotel for a healthy share of the turnover. Auckland airport would also appear to be in a privileged position by contributing little or no cash. Some or all of the the land value may be their only contribution to the project, however they will be next in line to access a good portion of the hotel's turnover by the ground rental they will be charging.

So, Tainui will be effectively stumping up all of the cash and taking all of the risk.

The Rugby World Cup is an opportunity for the accommodation industry, however is this project an example of misplaced optimism?

Source: Click HERE

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