Backers hopeful of 'way forward' for hotel

Dave Cull.
Dave Cull.
A major step forward for Dunedin's $100 million waterfront hotel project could be imminent following a marathon meeting of the Dunedin City Council.

The Otago Daily Times understands key parties involved in the controversial project are poised to make a significant announcement about the project's future, possibly as soon as this morning.

That followed a marathon nine-hour council meeting on Monday, which included more than an hour spent debating the proposed waterfront hotel in the non-public section of the meeting.

Steve Rodgers.
Steve Rodgers.
Dunedin Mayor Dave Cull and councillors remained tight-lipped about the discussion when contacted yesterday, but the meeting's agenda listed the ''waterfront hotel'' as an item for discussion in the closed section.

That could suggest councillors were being updated on Mr Cull's talks with the developers, or that a deal was on the table for councillors to approve.

Several parties confirmed an announcement was imminent, but Mr Cull said yesterday he could not divulge details of Monday's discussions.

Dunedin lawyer Steve Rodgers, representing the developer, Betterways Advisory Ltd, also declined to comment, other than to say he remained ''very optimistic''.

Jing Song.
Jing Song.
''I'm still very optimistic that there's a way forward for the city and obviously for my people.''

Hints of progress came after Betterways director Jing Song, of Queenstown, earlier this month voiced her frustration at the slow pace of talks with the council, and described the hotel as ''a long shot''.

She had expected the next few weeks would be a ''very critical time'' for the project, but remained hopeful an agreement could be reached.

chris.morris@odt.co.nz

Flawed logic

Really Dave, I'm not sure what you do for a living but your business model wouldn't keep you in the accommodation industry for very long. Right now the hotel business is on the downswing. No doubt it will come back but in the meantime are you suggesting hotels should have staff hanging around waiting for hoped for business? It seems you want the stadium to compound its losses with cheap tickets whilst motels offer their rooms at a loss to ensure we fill up the city.
For the last time Dave, if it were as simple as you say the hotels would slash their rates in half. The reason they don't is that they would go broke as did Living Space who ran just that kind of model. Costs are fixed, and renting rooms at massively discounted prices cannot be sustained for long. The profit margins are not great and there is very little future in operating at cost or below.
Would you work for nothing? I am close to the industry and these are tough times. If the hotels discounted 40% of their rooms below cost what would those who had paid full tariff say? Seriously Dave, your business plan needs work.

Hotel woes

No need for me to brush up on the hospitality industry as I don't stay in hotels here in Dunedin - I find them overpriced, understaffed and, well, quite empty! I have no idea how they can be as we seem blessed by many experts in the industry out there. I liken this to the Forsyth Barr stadium. Look at last week's Warriors game. The stadium was empty. Why? Well, overpriced tickets. Same old story as for every event sports wise there that is not world cup related. Why not sell tickets for such events at a flat rate of $15 for all seats and fill the place up. Would they not buy food and drink and spend money? Maybe those running it are hotel owners who prefer it 40% empty.

Low paid casualised employment

"Would they not be paying said staff to hang around for the overpriced empty rooms?" asks Dunedin Dave, continuing his crusade for Dunedin hotels to offer cheap rooms to Dunedin people.  

He seems unaware of the way these businesses are run.  "Permanent" employment means the workers turns up every day, unless they get a call to say there is no work.  Cleaners clean only the bedrooms that were used, they do not clean the rooms that were not.  The number of actual permanent salaried employees, i.e. those who are not paid by the hour, is very low, on a quiet day. Dunedin Dave should not be imagining dozens of them sitting around in a staff cafeteria all day drinking coffee and playing five hundred.  
Was it ever like that?  I don't know.  What I do know is that labour laws make it possible for hotels and motels to cut the cost of employed labour to the minimum.  Anyone thinking that extra hotel accommodation means lots of yummy-money jobs should think again.  The jobs are nearly all part time at minimum or near-minimum hourly pay, with no security of income because some weeks the wage is very very low.  
Time to catch up with today's reality in the hospitality biz, Dave!

61% occupancy

Dave: With respect it is simply not that simple. Visitor numbers are down due to a high kiwi dollar and Europe still stuck in a recession. In addition Dunedin is not seen as a place to stay more than 1.6 days as evidenced by the latest NZ stats. Letting out rooms at under cost is a recipe for bankruptcy as happened at Living Space. The fixed costs are such that you cannot sustain losses on 39% of your rooms when struggling just to break even. If a room has a tariff of $140.00 per night and the cost to the business is $90.00 renting it to you at $70.00 is an unsound business model. If a business rents cars or equipment at under cost it is ultimately unsustainable. Believe me Dave if it was as simple as you say the Hotels would be doing just as you suggest, the fact is they cannot rent that many rooms at a loss and stay in business.

Your argument

stevesone7 - Firstly Dunedin Tourism in November, December and January have been the strongest since 2009, and within the strongest in the country. Yes occupancies are still only between 60-70% but for an annual figure thats actually pretty good. But it shows consumer confidence is growing as is domestic and most importantly international tourism (BY 29% IN DECEMBER!!!). Yes, we may have plenty of accom in your eyes but it's the style of accom. Chinese, UK, USA etc are not necessarily interested in staying at a motel and are looking for high end accommodation. We genuinely miss out on business because of the scale and quality of accommodation. 

Commercial accom monitor for December makes good reading    

Five star accomodation

The idea that Dunedin needs this hotel because we don't already have five star is just bunk

Hotel

I do not believe that MS Song cares about Dunedin residents. Sure her organisation will hire a few locals to set up the proposed hotel, but it will be "Kit Set". Most of the work will be done in China and assembled in Dunedin, mostly by Chinese Mainland workers.
Once it is built, the staff employment ratio to current employment levels in hospitality will not make a difference. For most of the part, this hotel is being built solely for the purpose of securing profits that come from China in the form of the China Mainland tourist market. There will be no trickling down of dollars. Rather, this hotel will force the closure of existing business and create more redundancies across the board, we can't afford to do this.

You would think they would know better after the stadium

That's really interesting statistics stevesone, and you could be right re the apartments which makes it even worse as a development in my mind because Dunedin doesn't need more accommodation short term or long term.  I wonder how many studio units are vacant this year!  

I don't live in dunedin but I do go there quite frequently and stay at motels.  I have also stayed at numerous other motels around New Zealand and I find dunedin no more expensive and equal in quality to every other place in the country.  If anything it's slightly cheaper.  

Someone mentioned Queenstown and mitre 10 not being orange,  that is correct,  the warehouse also is nice with a frontage of schist.   There are extremely strict regulations for even home owners re the colours they can choose to paint houses and roofs so nothing spoils the landscape.   There are strict height restrictions, no way would such a hotel get the go ahead here thank goodness.  This is because those that live in queenstown value our beautiful surroundings,   Dunedin is beautiful too - shame so many don't value it.  

Mega-ugly

Don't forget that the facade is much higher than the actual roof, just so they can inflict more orange on us.

 

5 stars could be hard to maintain

First off, I am in favour of the hotel but not the proposed design.

A 5-star rating is a rigorous process to obtain and maintain. Odds are that it will be 5-star for a year or two then four and so on.

And you can purchase one of the apartments as an investment, if you wish. Just contact the developer's agent for a prospectus.

And remember, the Mitre10 development was in breach of it's consent and had to be retrospectively approved.

61% and falling

Stevesone: Maybe the 61% is down to their stuck-in-the-mud pricing? Would they not be paying said staff to hang around for the overpriced empty rooms? Would they not be better paying the same staff when customers were actualy staying there? How can having 39% of the rooms empty be good for business or staff? If other hotels close when this one opens they have nobody to blame but themselves.

Occupancy is not good at all

Dave: The current hotel occupancy rates for Dunedin are only 61% (NZ stats) which is just slightly above break even. One local major hotel was sending staff home on enforced leave last December due to lack of guests. Offering rooms at less than cost just makes matters worse and compounds losses.
What is reasonable to you Dave? $70.00? Rates must be paid, staff costs, laundry, Sky TV, wear and tear, damages, new equipment, maintainance, electricity and so it goes. The profit margins are already rock bottom. Living Space went broke, as has a major motel in North Dunedin. The new hotel's room rates will start at 5 star prices which will be in the $300 plus bracket. Are you prepared to pay that sort of money?
Once the new 5 star hotel struggles for occupancy (which they will) they will cut prices and put the other hotels under even more pressure. Like I said, build the new hotel, but don't think Dunedin has the current occupancy numbers to make it work. The same numbers will come but will just be divided up between already struggling operators.
It is clear to me that the selling of the proposed apartments is where the real money will be made by the developers.

Get a grip

Who in their right mind would pay $50 let alone $150 for a night in a hotel in their own city when they can stay in their own bed (preferable for most) for free?

Other than the unfaithful, I cannot think of any. No matter what any of you think, the developers are not planning to build this ediface for the benefit of us locals nor for the economic benefit of the city. 

Agree

I agree Sparrowhawk, but the arguement for businesses that all their branches nationwide are the same is actually wrong. There are places they weren't allowed to use traditional colors . Take Mitre10 for instance in Queenstown - they weren't allow to use orange, and I can't remember where (think it was Mosgiel) McDonalds wasn't allowed to use it golden arches. So in fact they can use alternatives when forced to. Which makes your points even more valid.

A room and two breakfasts

Actually, yes they should do all they can, as are they not down on room occupancy.  You are correct - the Smiths of the world on occasion do like a night away from home but again you are correct, we don't bother and stay home instead. Were there to be more reasonable pricing reflecting our residential status maybe more of us would consider a night out spending our money staying in the otherwise empty room. Or maybe your businesse plan is better - lots of empty rooms, no local use and doors closing for good. Yep, thats the Dunedin way.

A cosy nook and 2 breakfasts

"Why would I pay upwards of $150 for one night in a very average room and $50 for 2 breakfasts on top," asks Dunedin Dave who upbraids "the hotels around town" because they "now do stuff all to entice the good people of Dunedin to use them". 
I'm sure the people who need to spend a night away from the family home in their home town, traditionally "Mr and Mrs Smith" (with apologies to all the Smiths out there who are Smiths even when they are at home with their own spouses) can work out how to find a hotel or motel.  It has been going on for generations. Have today's people suddenly become so feeble that they need accommodation providers to pay for promotions and special rates?

What next?

Soon we'll hear what Betterways intends.

A clarification. The current tower development proposal (LUC 2012-212) - declined by the city council's hearings committee and with the decision appealed to the Environment Court by Betterways - has more apartments than hotel rooms, as shown in renders presented with the resource consent application. The business case for the tower of apartments (and a hotel) was not touched on by Betterways' evidence to hearing, in application. Betterways chose not to comment on the proposed apartments (everybody loves a five-star hotel, with no objection to one, right? warm fuzzies) or the specific market(s) these were aimed at.

Are we waiting (round 2) for the vision of another accommodation block, this time beautifully mediated by DCC's planning prowess? Oh joy.

Naysayer this

Wow. Like I said. I wonder how many of the ayesayers  are going to be directly affected by this edifice? I was building things like this in Auckland in the 80's. They were crap then. People who have no experience with high rise buildings have no facts to base their opinions on. What does it take for you to realise that this is another blight which will disadvantage many to funnel a few more millions into a select few pockets? If in fact all the materials and labour are not imported wholesale,like of the Chinese gardens. Another thing I can look at every day and not afford to go to because of our "low wage economy" - execpt for the uni, which has squirelled away $600,000,000. Dont wory though, I can pick up the rates increases again. Tar and feather time for you.

Wheat/chaff

As sad as it would be for some to shut their doors, maybe we need less average and more quality accomodation. The new hotel owners will be targeting clients and I am sure they will not be spending their money for the fun of it. As I see it the hotels around town now do stuff all to entice the good people of Dunedin to use them. If they were serious they would offer Dunedin residents rates encouraging us to maybe have a meal out and a night away. Why would I pay upwards of $150 for one night in a very average room and $50 for 2 breakfasts on top. Time to get real and accept they are overpriced. If they close then it is down to lack of vision.

Build it and they will come

I have no issue with the new hotel being built but it will only signal the demise of some of its competition. Occupancy levels in Dunedin for hotels are already poor by national standards. The 5 star hotel will struggle for occupancy and slash its rates, ensuring potential guests will abandon the likes of Scenic Circle for the 5 star experience. We have already seen Living Space go broke and get sold to the university, a significant North Dunedin motel has recently gone broke so don't expect some economic miracle from this new venture. The sad fact is that the average Dunedin guest stay is currently 1.6 nights average (NZ stats) this does not equate to a vibrant accommodation sector. It reminds me of the projections for the stadium, despite the evidence some people are determined to blunder on regardless. There won't be any more visitors to Dunedin, just less revenue to be shared by the hotels already here. 

Perspective

I dont care if a building is orange as long as its in a part of town that doesn't impinge on the whole city. Mosgeil would have been fine. Harbourside so it can be seen from everywhere....no thanks. But we got it. Didnt even know it was happeninmg until there it was, all bright and vomitious. And just because all of them are orange NZ wide...just shows me that individual positions and aethetics are not consider anywhere .So sad.

Jobs

Of course it will bring in jobs and a many at that. Cleaners, bar staff, cooks, chefs and so on. It will need food supplied along with toilet rolls, dry cleaning, laundry and the list goes on. Tour buses dropping off clients who will spend money in the hotel for the profit of the hotel will still have a knock on benefit for Dunedin. And people do judge a place on its accommodation. It is not that we have bad places on offer now, but we don't have a genuine 5 star hotel here, and for that we will suffer. The area is depressing as it stands, and how can this be a blight on the city? Have you seen the 1970s square buildings that surround the old buildings blocking out views all over the city? Not one person has yet to tell me what it is Dunedin is doing to develop as a city. Building cycle lanes and expecting students to prop us up is not growing as a city.

An asset or not?

To the people who say this large hotel is a wonderful asset that will provide so many jobs, can you please explain how that is so? Maybe I am missing something but the way I see it is yes, while being built it will provide tradespeople with work - probably quite a lot -  but that will all be over once it's up and running and it won't take that long to build. 
I guess there will be staffing for it once it's a going concern, but that won't be a huge number of jobs and probably those jobs will be counter balanced by the jobs lost when some of the smaller hotels/motels close up due to the competition. 
People don't come to a city because a hotel is there,  they come to a city for a reason and take what accommodation is available.  It's not going to increase tourism in Dunedin. And then of course it's privately owned and its profits will go into the pockets of those who most probably will seldom be in Dunedin.
I'm not anti-development,  I am pro-drilling for oil and gas, but this one is going to be an ugly blemish on Dunedin's lovely landscape and like the stadium, hardly an asset at the end of the day.    

Re: Fingers crossed

Oh, why not indeed - a huge monolith only slightly ahead in aesthetics of the Soviet bloc apartments in East Berlin. I mean, who needs nice scenic vistas when we we can homogenise Dunedin to look like anywhere else, with concrete and steel. Nothing like a long dark wintry shadow either. Such is progress.

I have to wonder about people who have to be desiring slapping souless ugliness all over - the stadium and now this.  Plus of course they attack anyone foul of their scheme of things as negative and anti-progress.  Whatever. 

Anyway, how on earth is it going to fill up unless we build on new tourist attractions and other visitor things? Last I knew we were not stretched for accommodation. Or perhaps this is another 'build it and they will come' scheme? Sigh, when will they ever learn.

And what a clever idea, to put such a high riser on a strongly windswept part of the city, and on reclaimed land to boot! They'll need pumps going flat out 24/7 to keep the water out. (Britomart Place Station in Auckland is done in such a way and would flood in a short time if pumps stopped) Get a good shake and it should end up like the hotel Grand Chancellor. Maybe then it might make an attraction - The Leaning Tower of Dunners. Hmm, no, it's just not the same.

Accommodation block

Honestly, ej kerr, I think you are a teeny bit naive to expect "lucid and concisely argued opinion" about that accommodation block, (also referred to as a hotel) to hold any sway over people with their heads in the sand. Nah, that's way too much. They just want it built, "hurdles" (like the law) overcome, and "a great new (shiny) asset for Dunedin" built on a tiny strip of land along a major arterial route. No, we can't let reason (not to mention the law) get in the way of optimism. Surely, an agreement can be reached for the city to accept this generous gift, they say. Yes, I know it's laughable and defies logic - totally - but that seems to be one view that we are meant to take seriously.

Hotel

Let's hope the hotel is built, then hopefully all the naysayers can play pick up sticks and move (walk) to another city to spread their negativity crusade.

Fingers crossed

At last we might get this great new asset for Dunedin. At last the re development of a tired and let's face it never used part of the city. Who cares about a shadow who the hell will that bother last time I drove that way I did not see many houses or even people there. I think it will be great, bring in much needed employment and as it wont cost us a penny why not. I would even paint it orange if they wanted it!

Sound opinion

No matter the pending news of today, I suggest everyone interested in the Wharf Street hotel debacle reads the lucid and concisely argued opinion, Hotel decision was legal, not political, by Rosemary McQueen. Published in the newspaper today. Link

No no no

I actually love my harbour view. Encroached as it is by Bunnings, Mitre10 and the ever lovely Stadium. Before they came all I could see was nasty sea shore. I wonder how many of you who are in favour of this 80's glass curtain walled nightmare will be brushing their teeth in their reflection in it everymorning like I will? Certainly not the lovely Ms Song I bet.  

And here we go!!!

The Anti Group are not just complaining about the size and what the building looks like. Now they have started about the colour on the Mitre10 building, which is NZ wide (not just in Dunedin). What next????

Almost there. Just one more hurdle hopefully to get over!!!

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