Wellington Hilton, convention centre project relocates after land price standoff

Tuesday 23rd December 2014

A proposed $125 million Hilton Hotel and convention centre in Wellington will relocate to port-owned land near the central railway station after what is believed to have been a standoff over the price of the original site.

Wellington City Council had signed off on a 165-bed Hilton Corp hotel and convention centre on Cable Street, opposite Te Papa and handy to the bars and restaurants of Courtenay Place. But under a revised plan announced by the council today, the project would be built on the Interisland Wharf site near Wellington Railway Station that's owned by CentrePort.

The change is understood to have been sparked by a lack of agreement between local developer Mark Dunajtschik and the owner of the original site, property investor Andrew Wall. The council statement makes no mention of the price of the Cable Street site, but quotes Dunajtschik as saying it was no longer viable "for a variety of reasons."

The change means the proposal must go back to the council for approval but its supporters have made clear they don't want it derailed. The council's economic growth committee chair Jo Coughlan played up the location of the new site as "a positive point of difference", saying the new proposal would be "compelling" in attracting conferences, while Mayor Celia Wade-Brown called it "a fantastic spot."

Council chief executive Kevin Lavery said the proposed "Interisland Wharf package" would be much the same as the Cable Street proposal – a five-star hotel and a conference centre with capacity for up to 1,200 delegates. The council wouldn't face any increase in the costs already agreed with Dunajtschik and Hilton, he said.

“Mr Dunajtschik assures me the commercial nature of the proposed development is very similar to the agreement approved by councillors in principle in July this year – he would fund the construction of the facility, and the city council would pay an annual lease for the convention centre, which would be managed by Hilton," he said.

The council had agreed to pay an average $2.1 million a year to Dunajtschik under a 20-year lease on the convention centre, with the costs front-loaded in the first few years until they are offset by profits from events at the centre.

The council had said building the convention centre itself would have cost $55 million, with annual running costs estimated at $5.7 million. There was some risk to the city if the centre didn't perform as expected, it has said.

Under the original plan Dunajtschik agreed to finance the development with the Wellington Convention Centre slated to open in 2017.

The council said Wellington is the nation's second-largest destinations for conventions, attracting about 15 percent of the total and earning about $140 million a year. It estimates the new facility would attract 64 new events a year, adding about $21 million to Wellington's annual gross domestic product and directly create 200 jobs.

The proposed new site meant the developer’s architects and engineers were now redesigning the project. If the new version is approved by the council, resource consent would be sought later in 2015, construction could start in 2016 and the centre opened by the end of 2017, some months later than originally planned.

BusinessDesk.co.nz

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