Monday, May 14, 2012

Dunedin's New Hotel?

I see that a radical proposal to build an imposing $100 million hotel development in the bleak, windswept industrial port area of Dunedin has been announced this week.

An unnamed party has commissioned a lawyer to front the plan.

The proposal is to build a five-star, 28-level hotel and apartment accommodation that features  a swimming pool, a rooftop restaurant, an all-season entertainment rooftop area, car parks and a penthouse presidential suite. If built, the building will be the tallest in Dunedin and stand out from the crowd with the use of aluminum-framed textured facades and extensive use of glass.

The overall look of the stark design is bound to evoke controversy and it's scale will radically change the accommodation scene in New Zealand's largest provincial outcrop.

I can see that two camps will quickly form.

Those that will support the project will become swept-up in the glamor of the hotel business and envision themselves impressing guests as they sweep through an impressive chandaliered hotel lobby. Like most people, they assume that tourism is an easily understood one-dimensional business that provides great streams of income. They blindly assume the mantra, "build it and they will come" and believe this alone will attract hoards of tourists that were eager to visit before, if only the city had such an impressive facility.

A portion of these supporters will also put their money where their mouth is and eagerly fondle the hotel development's prospectus that will make no promises beyond a locked-in modest return for the first 2-years. The graphs of potential returns printed on glossy paper will presumptuously elevate skyward and will attract cheap finance for the development company from local Ma and Pa "investors.".

The hotel will attract a major international brand that will manage the business of the hotel and this will be seen as vindication that the development will be an outstanding success. The major players - the big names, Sheraton and the like - are in fact awake to the harsh realities of abysmal ROI from hotel ownership. Consequently they no longer own hotels and have become franchise operations that rent their name, offering a pooled marketing service and clipping the actual hapless hotel owners ticket for a piece of their turnover.

The other camp that will form will be the busybody social-minded folk that believe they have a collective right to impose restrictions and rules upon the productive. Dunedin will have its fair share of socialist cardigan-wearing, academic non-producers that will be earnestly forming committees against the development. The glass and aluminum facade of the proposed hotel will be like red-rag-to-a-bull to these hand-wringers that will be earnestly clinging-on to the concept that all development should be centrally planned and in keeping with Dunedin's old-world charm.

After the stadium blowout, it will be interesting to learn if the cash-strapped city council will be supportive and offer any enticements (ie corporate welfare).

The resource consent process, the fawning and the howling from interest groups will be interesting to follow.

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