Auckland Airport gets partners on board for hotel

Thursday 23rd July 2009

Auckland International Airport, the largest gateway to the country, has entered into a joint venture with Accor Hospitality and Tainui Group Holdings to build and operate a new four-star hotel.

The 260-room Novotel hotel, which is expected to be ready in time for the 2011 Rugby World Cup, is forecast to cost around $65 million. The hotel’s construction is estimated to cost around $45 million, and the deal relies on financing the project and securing a construction tender.

The airport will grant a long-term lease for land and maintain a minority holding, while Tainui, the commercial arm of Waikato-Tainui, will act as lead developer and investor in the venture. Accor, which operates the Novotel, Sofitel, Pullman, Mercure, and Ibis brand hotels, will manage the operation.

“There has been a clear demand from the tourism industry and travellers for a hotel in the airport terminal precinct for some time,” said Auckland Airport general manager property Peter Alexander in a statement. “The outcome will be a great hotel and will deliver yet another string to the bow of Auckland Airport.”

In May, the company’s retail outlook dimmed when the Commerce Commission ruled out a proposed single duty-free operator, amid declining fortunes for the tourism sector. Short-term visitors sank 5% last month from June 2008 as rising fuel prices and lingering concerns over the global influenza pandemic.

It’s been a rough year for the airport, which had its credit rating downgraded to A- from A by Standard & Poor’s around the same time it cut its forecast on retail revenue, which account for 28% of the company’s sales, to between $90 million and $93 million from $104 million.

Earlier this month it cut international landing fees by 5% and abandoned plans to raise domestic charges, but expected the fall in revenue to be offset by in its passenger service charges. The airport said it will review its pricing arrangements in six months. The shares rose 0.6% to $1.62 today and are down 3.1% this year.

Businesswire.co.nz

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