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Global accommodation players expected to have no reservations purchasing new Auckland hotel

Tags: Commercial

The land and buildings housing what will be one of Auckland’s newest four-star plus commercial accommodation venues, the Doyles Hotel on Hobson, are being offered for sale as a ‘turnkey operation’.

The location – at 66 Hobson Street, across the road from the Sky Tower - has been the retail premises of an army surplus and outdoor clothing and equipment store for more than 30 years.

Demolition work on the dated four-storey building currently on site is scheduled to begin early next year, with construction starting soon after, and completion of the new hotel planned for early 2020.

Plans have already been submitted for consents to construct a 208-room hotel on the 484 square metre site fronting directly onto Hobson Street. Current architectural configurations have room sizes within the 28-storey building ranging from 23 – 30 square metres.

The property is being marketed for sale by expressions of interest through Bayleys Auckland, with the deadline closing at 4pm on November 29. Bayleys Auckland tourism specialists Nick Thompson and Paul Dixon said that while only the land and buildings were being offered for sale at this stage, Bayleys already has several hotel operators lining up to enter into negotiations with the eventual new owner.

“Working with the developer at this intermediary stage of the project will allow any successful new owner of the site to have an influence over some aspects of the look and feel of the finished property – encompassing aesthetics, décor, and amenities,’ Mr Thompson said.

The Doyles on Hobson Hotel concept is currently in the process to be consented to contain a coffee outlet on the ground floor, with separate restaurant and bar on the first floor, and guest leisure amenities such as swimming pool and gymnasium. Various meeting and function rooms are also on the plans to cater for demands from both the business and corporate sectors.

The new hotel will be just 100 metres from the National Convention Centre currently under construction and also due for completion in 2020. It will also be a short downhill walk from the Viaduct hospitality precinct.

Mr Dixon said Bayleys expected to receive interest from all of the big global hotel management brands looking to establish or increase their footprint in the Auckland market, as well as from existing New Zealand-based hotel operators.

Mr Thompson said international hotel operators currently had a “voracious appetite” for acquiring new properties in Auckland – driven by the destination’s constantly rising visitor numbers.

“Over the past two years, during the peak season running from October through to March, Auckland’s bigger hotels recorded average occupancy levels of 87 percent – allowing hoteliers to really drive up their advertised rack rates, and push inbound operators harder for block booking discounted rates,” Mr Thompson said.

“Average daily rates are now at NZ$206 for the year ending September 2017 – an increase of 17.3 percent from the previous year.

“That bullish approach to the tourism sector has underpinned not only the construction of several new hotels in the CBD, but has also driven the refurbishment and conversion of existing building stock.

“Already this year’ Bayleys has negotiated the sale of the former New Zealand Herald office site on the corner of Albert and Wyndham streets – sold by Manson Properties to Australian-based Pro Invest, which is building a 500 room hotel to be operated by InterContinental Hotel Group and dual-branded under the Holiday Inn Express and Even Grande marques,” he said.

A just-released report by New Zealand Trade and Enterprise, entitled New Zealand Hotels – an Attractive Time to Invest, reports that: “A highly constrained (Auckland) hotel sector has resulted in competition for rooms.”

“More price-sensitive domestic demand has been replaced by higher value international guests, resulting in further increases to average daily rates (ADR) and revenue per available room (RevPAR),” said the report.

“Annual demand for (Auckland) hotels is forecast to increase to over 4.1 million room nights by 2025. This represents an increase of 45.5 percent over the March 2017 year-end.

“Auckland hotels experience the least seasonality of any hotel market in New Zealand. Supply (of hotel rooms) is slowly responding to the rapid increase in demand. However, there is still a significant lag in the supply of new rooms.”

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