Omarama Hotel offers investment and development opportunity

The opportunity to buy a prominent tourism investment property in Omarama, Central Otago, is being offered through Colliers International.

The Omarama Hotel, at the junction of State Highways 8 and 84 at the gateway to the Mackenzie Country and the Waitaki Valley, is offered with a lease in place to the current operators. The property is for sale by deadline private treaty closing on November 30 2016.

Barry Robertson, tourism broker in Colliers’ Queenstown office, who is marketing the property with colleague Steve McIsaac, says the property’s location on the main road between Christchurch and Queenstown will be a major drawcard for buyers.

“This hotel is likely to be considered a prime tourism property investment, given its position on the main road linking Queenstown and Wanaka with Christchurch,” he says. “Thousands of domestic and international tourists pass through Omarama every day, giving the hotel fantastic exposure and consistently high customer numbers.”

Omarama is just 45 minutes’ drive from Ohau Snow Fields and is surrounded by a number of lakes including Lake Benmore, Lake Aviemore and Lake Ohau. The popular Alps to Ocean Cycle Trail runs through the town, which links the Southern Alps to the Pacific Ocean.

The expected growth in tourist numbers into New Zealand will further increase the property’s attraction to buyers, McIsaac says.

“There is substantial growth in incoming tourists forecast across all New Zealand’s major visitor markets, including Australia, China, the United Kingdom, Germany and the United States. This is prompting buyers to look to get in now and add well-located tourism properties to their portfolios, in the expectation of solid income growth and capital gains into the future.”

The hotel is leased with rights of renewal potentially extending till 2030 - providing a long term, passive investment holding, Robertson says.

“We expect the opportunity to own a strategically-located tourism property, with the management outsourced to capable operators, to appeal to a number of buyers located around the South Island and beyond. The current operators are well-established and the business displays healthy turnover, making the hotel a compelling investment proposition.”

The property is made up of 6980m2 of freehold land (over two titles) and 710m2 of building area, with ample sealed car parking on site.

The building was originally constructed in the early 1900s with substantial additions and improvements having been undertaken since. It includes 10 guest rooms, a restaurant and dining area and an outdoor garden bar.

The main bar offers panoramic views and provides access to a grassed area for outdoor dining. Further amenities include a commercial kitchen, guest lounge, amenities, office and a managers’ apartment.

“The hotel offers a classic country pub experience, making it a popular stop for visitors passing along the road between Christchurch and Queenstown,” says McIsaac. “Both the accommodation business and the café/restaurant are well patronised by guests either staying overnight to enjoy the region’s attractions, or stopping by for a quick lunch on the road.”

The existing lease provides annual net rental income of $95,900, increasing to $120,900 in 2017. Along with the income stream, the property offers buyers the potential to develop and add value in the future, says McIsaac.

“There is a large vacant portion of land on the site, around 3,500m2 in size. This could be subdivided, or used for development of additional accommodation to increase the overnight guest capacity of the hotel.”

Located at the head of the Waitaki Valley in the Waitaki District, Omarama is surrounded by majestic high country mountain scenery and is part of the main tourism routes of the South Island. These routes offer key attractions including the Mackenzie Country, Tekapo, Twizel, Aoraki/Mt Cook National Park, Wanaka and Queenstown.

The latest figures from Statistics New Zealand show that the year ending August 2016 was another period of tourism growth for the Waitaki District. There was a 20.5% increase in international guest nights, which rose to 148,428, and a 7.3% increase in domestic guest nights, which rose to 276,816.

The South Island’s natural beauty is a key factor in tourism growth for the whole of New Zealand, which is reaching record highs. The hotel market is enjoying extremely high demand and increasing airline capacity into both Christchurch and Queenstown airports are fueling the rise in visitor numbers throughout the South Island, says Robertson.


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