August 24 2016 –
The opportunity to own an established and high-returning hotel property, four kilometres from Haast township on the West Coast, is being offered through Colliers International and NAI Harcourts.
The Heartland World Heritage Hotel, at Haast Junction, sits on 3.21ha of freehold land at the intersection of State Highway 6 and the Haast-Jackson Bay Road. It features 54 recently-renovated rooms, The Frontier Café & bar, the Arawata Bar and Waikato restaurant, along with a conference room and other amenities.
The property is being offered as a freehold going concern for $8,500,000 plus GST, with a management contract in place to the nationally-renowned Scenic Hotel Group. The buyer has the option to continue the current management agreement with Scenic as a passive investment, or take over management of the hotel as an owner-operator.
Steve McIsaac, tourism broker in Colliers’ Queenstown office, says the hotel business is generating very attractive returns, with gross operating profit (before management fees) returning 12%-plus on the asking price (for the year ended June 2016).
“Scenic runs a significant and high-performing operation at this hotel, under its Heartland brand. It has demonstrated ongoing solid turnover, based on its prominent location and ability to capture good numbers of overnight guests as well as people stopping for lunch while on the road.”
The Scenic Group has a strong presence throughout the South Island, which delivers ongoing business through the property and an excellent return to the owners, NAI Harcourts tourism broker Nick Lambert says. “The current financial year is set to return a solid increase in profitability, a result of increased revenue from accommodation and food and beverage.”
The building was constructed in the 1970s and contains two accommodation wings, the main hotel, a service area and staff accommodation. The property also comes with additional land which could accommodate further rooms, so future development could be an option for the new owner, says McIsaac.
“We expect to receive enquiries from investors and accommodation operators looking to acquire a strong-performing property, with the potential to expand the hotel and generate further turnover and profit growth. This could also be a great opportunity for a hotel operator to establish a presence on the West Coast.”
With New Zealand’s tourism industry continuing to grow, well-located visitor accommodation assets are considered strategic holdings by many buyers, McIsaac says.
New Zealand’s international visitor arrival numbers have doubled since 1993, and they are expected to keep growing at a rate of about 4% a year, with more and more people visiting the West Coast region. Guest nights on the West Coast rose nearly 17% in the two years to May 2016, according to Stats NZ’s Commercial Accommodation Monitor. Visitors spend $288 million a year on the West Coast, equivalent to 20.4% of the region’s GDP.
“Most West Coast accommodation businesses are enjoying good demand, with world-renowned natural attractions such as the glaciers and Milford Sound being on numerous travel itineraries. This property’s excellent location right on the region’s main highway, along with the current management agreement, makes the opportunity to buy this hotel very appealing,” says Lambert.
“There has been a surge in enquiry numbers from people who are keen to get a foothold in the New Zealand tourism property market, so this opportunity is compelling when compared with property in places like Queenstown which offer a lower return on investment.”
The hotel’s size also makes it a scarce asset, with the West Coast’s visitor accommodation supply mostly made up of motels. There are fewer than 10 hotels that offer 50 or more rooms between Haast and Westport, McIsaac says.
The location, within the South West New Zealand World Heritage Area, offers an excellent base for visitors to explore the region and its natural beauty, he says. “This is a prominent spot between the glaciers and Queenstown, in an area which is continuing to develop, with adventure tourism and walking two of the main drawcards.”
The proposed Haast-Hollyford Highway, if approved and constructed, would also benefit the hotel as it would offer an alternative route to Milford Sound directly past the property, Lambert adds.
Steve McIsaac – Colliers International Queenstown
Tourism Broker, Commercial Sales & Leasing
Mobile: 021 680 304
Barry Robertson – Colliers International Queenstown
Tourism Broker, Commercial Sales & Leasing
Mobile: 027 433 5941
Nick Lambert – NAI Harcourts
Tourism Business Commercial Hospitality
Mobile: 021 661 594