Business Hub: How the Cordis Hotel turned the lights back on

Cordis Hotel managing director Franz Mascarenhas says the sector needs a plan. Photo / Dean Purcell.

Late in March, Franz Mascarenhas walked through the empty lobby of the Cordis Hotel and wondered what was coming next.

Weeks before, the Auckland luxury hotel had been filled to near capacity, but with Covid-19 pandemic gripping the world and New Zealand in level 4 lockdown, there were just a few air crew and some stranded diplomats left behind.

Occupancy at the 410-room hotel plunged from around 90 per cent near the start of March to about 5 per cent in the early days of lockdown.

More than 30 years of working in hotels, mostly in management in this country, couldn't prepare Mascarenhas for the economic calamity he and other hotel bosses faced.

"I recall walking through the lobby and it was surreal. A place which is so lively and so filled with people was suddenly empty," he says. "And that is a memory which will stay with me."

He lives on site and while the future was uncertain, he was sure of two things.

He was determined to keep staff on, and also to keep building what will be the biggest hotel in the country when an attached tower is completed next year.

He says the wage subsidy — for now at least — has allowed the Cordis to retain its staff of around 440, with some people volunteering to go to a four-day week. Other cost savings have been made with suppliers.

Mascarenhas is the hotel's managing director and has always lived on site with his wife. Now a skeleton staff joined him in the Cordis bubble, looking after a handful of guests.

"We just wanted to make sure that we didn't have too many [staff] here, it was a good experience — we became one family bubble."

The Cordis is owned by the Langham Hospitality Group, which has 22 big hotels worldwide. That company is in turn owned by listed Hong Kong property and hotel conglomerate the Great Eagle Group.

Political instability in its home state and now Covid-19 have seen Great Eagle's share price slide by a third in the past year but it is diverse by sector and geography and continues to expand its hotel holdings.

Early this month Langham announced it would open a large new hotel complex on the Gold Coast, and apart from a pause in construction during level 4 in New Zealand, work on the $150 million, 16-floor tower next to the Cordis is going flat tack.

Domestic visitors are starting to return to the Cordis. Photo / Dean Purcell.

Why the Optimism?

Even before the pandemic, occupancy at many Auckland hotels was weakening as tourist numbers flattened and more supply hit the market. That will be exacerbated with more projects nearing completion in the city and by the bigger problem: no overseas visitors likely this year and only a slow recovery from 2021.

Tourism is populated with optimists and Mascarenhas is one of them. He graduated from a hotel management school in India a little over 30 years ago, has worked in China and Malaysia for the Sheraton group and then for the Hyatt Hotel group when he moved to New Zealand 21 years ago.

He shifted to what is now the Cordis seven years ago.

The 63-year-old concedes there will be a short term market imbalance but he's looking beyond the short term.

Watching work on the tower, he describes how it will offer a new standard of room type, a new club floor at level 16, and on the top the Chairman's Suite, which will be one of the biggest in town and offer visiting dignitaries sweeping views that can't be built out.

The hotel has worked with the police and the government visitors' office to ensure the suite meets the security requirements of the world's most powerful leaders. It will have its own lift to take them to the top floor.

The 250-room tower will be competed well before the Apec leaders' meeting scheduled for late next year.

Mascarenhas says no bookings have yet been taken for the presidential-standard suite. Other parts of the Cordis are being renovated, including the expansion of its Eight Restaurant and this work will be finished later this year.

"I want to say that we are really bullish about the long term future of New Zealand and Auckland," says Mascarenhas. He is also guardedly optimistic about the return of domestic business, which has come back faster than expected to the hotel's rooms and restaurants.

Within a short time of level 3, when restaurants could reopen with conditions, the hotel's high teas were quickly booked out at weekends and in spite of smorgasbord getting a bad rap, more than 100 customers have booked for a weekend feast. And with some promotional pricing the hotel is 50 per cent full at weekends.

Cordis managing director Franz Mascarenhas near the new tower being built. Photo / Dean Purcell.

Mascarenhas says Aucklanders have rediscovered a taste for holidaying in their home town.

The local corporate market is showing some faint signs of life — midweek occupancy is around 18 per cent — but a meaningful recovery would depend on how confident businesses felt about sending their staff out on the road.

"As soon as people see that New Zealand's really safe, that confidence is going to translate into increased business just not just for us, but for the industry at large."

However the corporate market wouldn't come near to full recovery until Australians could return quarantine-free and the timing of a transtasman bubble was becoming increasingly murky.

The wider Langham group's outlook was improving, after operations were suspended for a time in the United States and China.

"But China has seen a really remarkable recovery. And most of our hotels, they're actually starting to trade closer to their old levels."

No Vacancies (for quarantine that is)

Although the Cordis is eager for guests, its parent company took a decision early in the outbreak not to take those entering the country who needed to be in self isolation.

The Government has paid out around $50 million to house them here — about $7000 a booking for 14 days.

That's provided rival operators with much-needed revenue, but also extra headaches, especially as public focus goes on how officials are managing the isolation schemes.

Mascarenhas said the initial Cordis decision was taken in the interests of existing guests and staff.

And now there is positive spin-off for the brand.

"Certainly they've been doing higher levels of business but we are now seeing a greater number of people wanting to have group bookings with us, we're actually getting bookings from some of these hotels."

Guests have said they would prefer to stay in a hotel that isn't part of the quarantine scheme.

"I think it's a policy that has worked well for us, for our colleagues, and I think we have an inherent advantage going ahead and hopefully we'll see increased patronage."

What's the plan?

Records show Great Eagle Hotels by mid-June had claimed a wage subsidy of $3m for its Auckland property and Mascarenhas said he applauded what the Government had done to help keep staff in jobs.

An artist's impression of the 17-level tower being built at the Cordis. Image / Supplied

He was also grateful for the Auckland Council's suspension of the targeted accommodation rate.

"But I think that these really stopped the bleeding at that stage. I think now is the time we need central and local government to step up and provide certainty."

The hotel and tourist industry needed a timeframe for when a transtasman bubble will be established and also as much certainty as possible about when borders will be opened to others beyond Australia.

"This will help us plan, and make sure that we are ready and in a position to capitalise when that happens."

While the Government's dedicated $400m tourism fund was also welcome, he said there were few signs of any trickling down to Auckland.

"I think the more important phase is ahead of us, where we really need our elected representatives to step up — and then get back into a rapid, aggressive growth phase."