The lease on New Zealand’s first modular-build hotel has been sold ahead of the premises being finished ready for operation.
The five-story Hotel in Central Christchurch is an 88-room property with a 4-star Qualmark rating. It will open as the Arden Hotel following a lease agreement between Christchurch developer Gary Le Pine’s Lepdon Holdings company and New Zealand-based hotel operator Golden Grand Trading.
Golden Grand Trading has committed to a 15-year lease on the property – with two further rights of renewal. The lease was brokered by Bayleys Real Estate’s hotels and tourism director Paul Dixon, who said the pending opening of the Arden Hotel reflected the regrowth of Christchurch’s commercial accommodation sector which had taken a protracted hit following the 2011 earthquake.
“Before the ‘quakes there were some 3900 three to five-star branded hotel rooms in Christchurch. Post the quake that number plummeted to less than 1000,” Mr Dixon said.
“Now it’s back up to an inventory of 2700 rooms, with an additional 400 planned to come on line in the coming 12-months. That’s still at an inventory lower than before the ‘quakes so there is still plenty of capacity in the market – as identified by Arden’s operator.
“With properties such as The Hotel Grand Chancellor, the All Seasons Christchurch, the Heritage Towers, the two Millennium-branded hotels, the Best Western Clyde, the Holiday Inn City Centre and the Holiday Inn on Avon all being taken out of the city’s room inventory as a result of the ‘quakes, there has been a hole - which this Arden Hotel will ultimately help fill.”
The Arden Hotel is located on a 1,300 square metre site on the corner of Colombo and Salisbury streets. The property was built in a Vietnamese factory and was shipped in to Christchurch in 17-metre long double-room and corridor modules.
Shipping took approx. 4 weeks and comprised about seven percent of the building's cost. The finished room modules included all fixtures, fittings and furniture – right down to bathrooms and painting.
Data analysis from Bayleys indicates that over the past two calendar years, construction costs on large commercial projects have risen between six to eight per cent annually – cutting into developers’ margins.
Mr Dixon said Arden’s build cost was between 10 to 20 percent cheaper than a traditional New Zealand commercial builds – with raw materials costing anywhere between 30 and 70 percent cheaper than New Zealand alternatives.
“Electrical cabling was the only component of the Arden hotel build bought in New Zealand. Arden hotel builder TLC now has two further 200-room hotels to build in its Vietnamese factory for sites in Queenstown,” he said.
“Lepton Holdings had been looking for a prefab’ manufacturing contractor in Asia as the company simply couldn't make a traditionally-built hotel stack up financially.
“The ensuing lower degree of on-site handling as the Arden emerged from the ground up meant lower levels of traffic disruption and dust nuisance, while the pre-built sections enabled a quicker finishing of the external façade.”
Mr Dixon said that less than 10 percent New Zealand hotels sustaining a minimum of 80 rooms were on lease agreements.
“Christchurch hotel returns have remained relatively flat over the past seven years – even with the city’s room inventory remaining well below what was available prior to the 2011 earthquake,” Mr Dixon said.
“In-bound tour companies and the domestic meetings/incentives/conference sector were reluctant to feature Christchurch on their packages and itineraries – partly because there were fewer venues to accommodate large groups, and partly because the supporting tourism and event hosting infrastructure was also in a rebuilt phase.
“With both those pillars now firming up, the upward economic cycle is now feeding on itself. Larger visitor groups are coming back to the city, so supporting infrastructure is coming to the fore - such as the new convention centre due for completion at the end of the year is coming.
“The Arden Hotel is part of the bow-wave of tourism regrowth in the city.”
The chief executive director of Arden Hotel, Danny Kodoor, said: “As the hotel operators, we are excited to be part of this landmark and innovative project - bringing the best of international technology to Christchurch.”
“The city has had its share of challenges and as we bounce back, we are proud to be associated in a small way of the rebuild of this vibrant city,” Mr Kodoor added.