West Coast trust eyes hotel development
13.04.2007, 04:23
A West Coast Development Trust deal with the Scenic Circle hotel chain may total as much as $45 million, a third of the trust's total assets.
Hotels in Lisbon
At a news conference called today in response to growing disquiet about the proposed investment, trust chairman Frank Dooley would neither confirm nor deny the amount involved. Figures of $20m and $45m have been raised in recent days but he said neither was accurate.
He confirmed they were in negotiation for a joint venture with Scenic Circle, owned by American multi-millionaire Earl Hagaman.
Mr Dooley said a range of options and costings was being considered and nothing had been finalised.
But if the upper figure is correct, the Scenic Circle deal will effectively equate to $13,600 for every man, woman and child on the West Coast.
Mr Dooley said the hotel chain approached the development trust with "a vision" for upgrading its two hotels at Franz Josef Glacier and one at Fox Glacier.
The trust's holding company was aware there was a shortage of hotel beds in Westland and investigated the possibility.
A joint venture was proposed between the trust and Scenic Circle, followed by a due diligence process and that had now reached the heads of agreement stage.
Mr Dooley said the trust believed its due diligence had been "extensive" but today accepted the Westland District Council had not been invited to contribute to the process.
Instead the "expert advisers" had based the council's input on a conversation Scenic Circle's hotel manager Lani Hagaman had with Westland Mayor Maureen Pugh 12 months ago.
Mrs Pugh said today that was unsatisfactory. Had her council been consulted properly it would have informed the trust that plans were already in the pipeline for two new 100-bed hotel complexes - one in Franz Josef and another in Hokitika - and that the accommodation problem was not as dire as the trust believed.
"I would have thought thorough due diligence would have involved a little more than second-hand verbal opinion," Mrs Pugh said.
Trust chief executive Mike Trousellot said the deal offered genuine long-term investment opportunities and could yield strong returns over time. It would not affect the trust's investment programme and have no impact on its investment portfolio.
Currently, Scenic Circle has about 230 hotel beds in the glacier region and the new proposal would involve upgrading them and creating at least 60 new rooms. Up to 30 new jobs would be created if the project went ahead.