The historic hotel is costing taxpayers $2.2m a year in maintenance costs.
Video / NZHerald
The Chateau Tongariro Hotel sits empty and in disrepair, and the cost to taxpayers of keeping it in its current state of limbo is expected to reach $2.2 million in the current financial year.
The Department of Conservation (DoC) - which owns the land on which the closed hotel sits and has responsibility for its maintenance - has confirmed the cost through an Official Information Act request.
CJ Juby, director of business services, said the figure includes: all maintenance and operating costs (such as on-site security, maintenance, rates, electricity and insurance) as well as compliance activities and reports commissioned, including those to assess the buildings’ state of repair.
The figure does not include meaningful repair work, or the cost of the chateau’s portion of shared facilities in the Tongariro National Park, such as water treatment in Whakapapa village.
The fate of the chateau – a category one historic place, listed by Heritage NZ – has been uncertain since February 2023, when Malaysia-based hotelier Kah NZ formally abandoned long-running efforts to agree to terms with DoC to renew its lease of the site, located on the flank of the active volcano Mount Ruapehu, within the park.
The following month, the department took on responsibility for care and maintenance of the site, including the main neo-Georgian building, which opened in 1929.
Over a year later, lease termination negotiations with Kah remain ongoing, according to the department, and neither the last government nor the current one have yet been able to settle the vexed question of how much public money should be spent preserving the historic building.
Minister for Conservation Tama Potaka could not say when meaningful decisions would be made about the chateau’s future.
He said he is taking advice and considering options and that: “demolishing the chateau is not currently being considered”.
At the time of relinquishing its lease, Kah blamed the business closure on the seismic-strengthening work the chateau needs and business uncertainty resulting from the financial troubles of local skifields, Tūroa and especially Whakapapa.
Beyond the annual costs released by DoC, the estimated expense of repairing the run-down chateau, and the additional expense of earthquake-strengthening (not yet formally quantified) is likely to top $100m.
A 2023 report commissioned by the department from property consultants Prendos estimated that $5.4m worth of repair work is “urgent” and “required”. The damage ranges from wet and decaying timber framing to extensive problems with areas of the roof, including inadequate pitch, corrosion, and leaks.
In addition, a report by engineers WSP found that the building is “earthquake-prone” and meets just 15 per cent of new building standards.
Strengthening is required, although technically it doesn’t need to be completed for several decades. However, even if DoC could find a new tenant for the chateau without first undertaking structural strengthening, it’s unlikely it would countenance the risk.
Juby confirmed the department has neither commissioned nor received any estimates for seismic-strengthening work.
Department of Conservation Minister Tama Potaka said demolishing the chateau is not currently under consideration.
Complicated lease termination negotiations
Several factors complicate the lease termination negotiations ongoing between DoC and Kah.
While the Crown owns the land on which the chateau sits, Kah bought the chateau itself and many of its ancillary buildings from the government-owned Tourist Hotel Corporation of New Zealand in 1991.
The contract terms stipulate that any successor lessee of the site will owe Kah for the buildings’ value (to be determined by appointed valuers).
In addition, the lease states that the buildings must be returned in good repair and condition, otherwise the value owed to Kah should be diminished commensurate with any deficiency.
Documents released by DoC under the OIA note that the department has considered paying Kah for the buildings in advance of finding a new lessee.
The Treasury identifies the chateau as a significant cost pressure.
In the December 2023 half-year economic and fiscal update it warned: “The lease for the Chateau Tongariro Hotel was terminated on March 9, 2023. Following termination, responsibility for the building and all improvements on the land was moved to the Government.
“Options are being investigated for the future of the chateau and surrounding facilities, including undertaking seismic-strengthening work, but at this stage, there is uncertainty around any future fiscal implications for the Government.”
