Tourist hotel for sale at Haast Junction

4:11 PM Thursday August 25, 2016 Colin Taylor

An aerial view of The Heartland World Heritage Hotel, at Haast Junction, on the West Coast

The Heartland World Heritage Hotel, at Haast Junction, on the West Coast is for sale offering a purchaser the opportunity to own an established and high-returning hotel property, four kilometres from Haast township.

The hotel sits on 3.21ha of freehold land at the intersection of State Highway 6 and the Haast-Jackson Bay Rd. Buildings encompass 54 recently-renovated rooms, The Frontier Cafe  & Bar, the Arawata Bar and Waikato restaurant, along with a conference room and other amenities.

The property is being jointly marketed by Colliers International and NAI Harcourts as a freehold property and going concern business for an asking price of $8.5 million 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,” says Steve McIsaac, tourism broker in Colliers’ Queenstown office. He says the hotel business is generating very attractive returns, with gross operating profit before management fees returning over 12 per cent 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,” McIsaac says. “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.”

Nick Lambert, tourism broker with NAI Harcourts, says 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.

“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 inquiries 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.

He 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 per cent a year, with more and more people visiting the West Coast region.

“According to Statistics New Zealand’s Commercial Accommodation Monitor, guest nights on the West Coast rose nearly 17 per cent in the two years to May 2016. Visitors spend $288 million a year on the West Coast - equivalent to 20.4 per cent of the region’s gross domestic product..”

Lambert says most West Coast accommodation businesses are experiencing good demand, with world-renowned natural attractions such as the glaciers and Milford Sound on numerous travel itineraries. “This property’s excellent location right on the region’s main highway, along with the current management agreement, makes the chance to buy this hotel very appealing,” he says.

“There has been a surge in inquiry 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.”

McIsaac says 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,” he says.

“This location, within the South West New Zealand World Heritage Area, offers an excellent base for visitors to explore the region and its natural beauty. 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.”

Lambert says 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.