Project Palace swells to seven cities

Dunedin has now been included in Project Palace

Project Palace is to be expanded to take in seven capacity-constrained cities with the addition of Taupo and Dunedin.

The government initiative to attract foreign investment into New Zealand’s hotel sector as visitor numbers boom has, to date, promoted opportunities in five cities.

But an update to the original supply and demand research will include Dunedin and Taupo in addition to Auckland, Rotorua, Wellington, Christchurch and Queenstown.

The move was announced at the annual New Zealand Hotel Industry Conference in Auckland yesterday by New Zealand Trade and Enterprise investment director, Paul Burnaby.

He said: “It’s been a year since we released the market analysis and we are interested in seeing how the market has responded to this as there have been a number of hotels mooted.

“So we’re currently in the process of updating this year we are going to incorporate Taupo and Dunedin into the market analysis and this will provide us with an updated view.”

The results of the first round of analysis were released in the middle of last year and revealed that New Zealand needs 26 new hotels over the next decade to cope with visitor demand.

The research focused on Auckland, Rotorua, Wellington, Christchurch and Queenstown and shows that, if demand and supply estimates are borne out, the shortfall in new hotel rooms is expected to be up to 4526 across these centres by 2025, over and above new hotels currently planned.

Burnaby added that Project Palace has successfully secured deals, giving the $7.1m purchase of the old Press site in central Christchurch by Japanese company H.I.S. as an example.

The travel company has developed hotels in Japan, including the world’s first robot hotel, and is expected to build a five-star property on the 2000 sq m site between Cathedral Square and Gloucester Street.

Burnaby added: “There are other negotiation ongoing outside this, and in additional we are assisting as we can on a number of other potential developments.”

In addressing a question regarding the impact of Auckland’s new accommodation targeted rate, Burnaby said the additional costs were affecting some potential investors.

He said: “Obviously financial feasibility is a problem. Construction and land costs are already high so it’s more difficult if this is more of a problem.

“Anecdotally, two investors have said it is the straw that broke the camel’s back, but then again there are still projects that are going ahead.”

The rate, which was introduced on 1 July, sees a targeted rate based on capital value applied to hotels, motels and B&Bs.

Goff mooted a visitor levy late last year as part of a plan to raise up to $30m annually to replace ratepayer funding currently spent by council bodies on attracting visitors and supporting major events.

Advertise here