A Christchurch CBD located hotel under construction has been put on the market by its joint venture developers prior to completion.
Initially planned to open as New Zealand’s first Ramada Encore, the 5-storey, $15 million central city hotel is now being offered to the market with vacant possession or with the existing global brand franchise agreement.
New Zealand’s tourism industry has overtaken the dairy industry as the nation’s number one export earner -- in the year to August 2017, a new annual record number of 3.67 million international visitors arrived, up nine per cent on the previous year.
By 2023, annual international visitor arrivals are expected to reach 4.9 million, eclipsing the country’s population of 4.7 million and representing annual growth from 2017 of 4.8 per cent.
Resort Brokers Australia has launched an international expressions of interest campaign to sell the 88-room, 3.5-star hotel being built at the corner of Colombo and Salisbury streets.
The asset, identified by the agents as the Cosa Hotel, is being developed by Christchurch-based Lepdon Holdings in collaboration with international modular construction company, TLC Modular, based in Vietnam.
Lepdon Holdings, headed by experienced local accommodation owners Gary and Ann LePine, had planned to operate the property themselves.
Earlier this year, they struck a franchise agreement with the giant Wyndham Hotel Group to introduce a new brand, Ramada Encore, to New Zealand’s skyrocketing visitor market.
“Now the partners have decided to sell the asset, so we are offering the property with vacant possession, although there is still the option to take up the original franchise agreement,” Resort Brokers' Trudy Crooks said.
Development of the hotel, using TLC’s modular construction method, is well advanced, with completion due in the first quarter of next year.
“Hotel room stock is currently insufficient to meet the demands of New Zealand’s rapidly expanding visitor market,” Crooks said.
“Christchurch in particular has experienced a shortage of hotel accommodation since the 2010-2011 earthquakes. What limited new supply has entered the pipeline is largely focused in the 4-star and above categories, leaving a distinct shortage of quality mid-scale 3.5-star stock.”
Broker Glenn Millar said the new Christchurch Hotel was forecast to show an annual net operating profit of $2.44 million by year three, based on professionally prepared financial projections.
“Modular construction has been identified as an innovative solution to overcome impediments to hotel development and delivery, faster and more cost-effective,” he said.
“It involves a process whereby rooms are manufactured and fitted out off-site under quality-controlled factory conditions, then delivered to the site for assembly in strict accordance with New Zealand’s building codes.”
The expressions of interest period for the sale of the Cosa Hotel Christchurch will close on Friday, 17 November.