A major Wellington-based property investment group has bought Tauranga's Hotel Armitage and intends to upgrade and enlarge it.

The 81-room hotel on the corner of Willow St and Park St had just finished major earthquake strengthening to bring it up to A grade seismic strength. Further modernisation could take the hotel from its current three-star plus grading to a four-star hotel.

Primeproperty Group is headed by 58-year-old Eyal Aharoni who told the Bay of Plenty Times Weekend that they will give Hotel Armitage a full upgrade and potentially enlarge it.

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"There is quite a large land parcel so there's room for growth, we are planning to enlarge it."

It was the Wellington-based company's first investment in Tauranga although Mr Aharoni visited the city two or three times a year - until recently mooring a boat at Bridge Marina.

He said he had a real affection for Tauranga and loved cycling around the city. The airport was within walking distance of the marina. "What I like is that everything is so close."

Mr Aharoni said Hotel Armitage was well positioned. "We think it will be a good property."

He believed that Tauranga would become a major tourist destination. "I have been looking at Tauranga for quite some time ... it is a lovely place."

Mr Aharoni was selling his boat formerly moored at Bridge Marina and intended to buy a larger boat. He was unsure where it would be moored, saying the city's marinas were fairly tight although he intended to spend time boating in Tauranga.

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Hotel Armitage's owner for 20 years David Gardner said all Mr Aharoni had to do was the "inside pretties".

He said the hotel appealed to the over-45s, corporate travellers and sports teams because of its restaurants, bars and areas where guests could meet friends and business associates. "Europeans love it because it is one of those older-type hotels."

He said it was pretty hard to make a block building look nice but every room had a terrace balcony. The tariff of $135 for a room was at the lower end and he said 2015 had been phenomenal for the hotel after business had "declined a touch".

Mr Gardner, who also owned City Suites opposite The Domain, said he decided to sell because he had reached the age of 65 and had owned the hotel for 20 years. He was heartened by the injection of funds by the council into events, saying events were essential for the city and downtown.

Mr Aharoni founded Primeproperty Group in the early 1990s and has guided it to become one of Wellington's biggest property companies. Investments were primarily in Wellington but it had a small number of commercial properties in Hamilton and owned Beachside Resort in Whitianga. Major Wellington hotels included the Mercure Wellington Abel Tasman, Grand Mercure Central City and Hotel St George.

Nuree Allan, the managing director of Link business brokers in the Bay and Waikato, said the sale of Armitage Hotel was a one-off opportunity to secure a freehold going concern located on one of the best sites in Tauranga.