The site on Durham St where the proposed hotel was to be built.
The site on Durham St where the proposed hotel was to be built.
Two leading Bay developers have withdrawn from trying to build an internationally branded hotel on council-owned land opposite Tauranga's Baycourt Theatre.
Tauranga builder Peter Cooney and Rotorua hotel developer Ray Cook have officially called it a day after two years of trying to bring deals to fruition on the primedowntown site.
"We tried to do something but it did not happen. Life's too short ... I have folded my tent and moved on," Mr Cook said.
Mr Cooney said no one was prepared to take up the reins and get it moving - there had not been a great deal of interest.
The fundamental problem was finding an investor prepared to risk spending $15 million to $20 million on a new hotel when there was uncertainty around Tauranga's hotel occupancy rates and hence the turnover.
He said big cities had proven occupancy rates, like Auckland's strong 75 per cent occupancy. Investors could invest with confidence in that market knowing the turnover would give them a good rate of return.
"People coming to Tauranga do not know what the turnover is.
"Based on an unknown turnover, why would you take that risk."
He explained that hotel operators paid building owners a percentage of the turnover as rent and the risk for the investor was what that turnover would be.
Investors could easily get better returns elsewhere on $15 million to $20 million if the occupancy rate on a new hotel turned out to be 50 per cent.
Hotel project bids on council's Durham St site
* 2008: Tainui/Accor deal falls over when global credit crunch hits
* 2013: Cooney/Cook lodge bid for "sure winner" consortium to build and operate a Travelodge
* 2013: Tainui given second chance and chosen as the preferred developer
* 2014: Tainui withdraws bid after going through due diligence
* 2014: Cooney/Cook unsuccessful following renewed negotiations with another hotel operator
