Lakes trust's plan for $20m hotel involves moving art gallery

The ArtsPost building which would become the lobby of the new hotel. Photo / Christine Cornege

Plans are accelerating to build a $20 million-plus hotel with 150 rooms on council-owned land behind Hamilton's ArtsPost in Victoria St.

The city council last week considered a proposal from Te Arawa Lakes Trust to develop the spot, which would transform the ArtsPost building into the hotel lobby and force the city's art gallery to move.

The meeting was private because the parties were concerned about commercial sensitivity.

The Herald understands the Rotorua trust offered $1 million for the land in return for an 8.5 per cent guarantee from the city council as a return on its investment for 10 years.

The land is valued at $1.5 million.

Talks on the hotel have been more than a year in the making and were initially led by former Hamilton City Council chief executive Michael Redman. The council was last briefed in December.

The latest offer received a better response from the council than a previous suggestion that the land be sold for $1 and the council would not be an investor in the hotel.

A Te Arawa Trust representative and deal broker Gordon Campbell of Campbell Consulting were present during the discussions.

The Rotorua investor still needs to secure a hotel management firm and brand and is understood to be in discussions with a number of interested chains. No one at the Te Arawa Lakes Trust responded to Herald inquiries about the hotel.

Hamilton City Council deputy chief executive Blaire Bowcott said the council was in commercial discussions with one party who shared their proposal for a hotel on the site but was unable to give further details at this stage.

Sources said the council agreed in principle to support the project. The trust has been asked to provide the council with more information including the design, size and how it would be integrated with the river.

As part of its City Heart Project, the council has previously identified the site as an arts and cultural precinct and has asked the trust how this could be integrated with the proposed development.

Earlier councillor Martin Gallagher declared during the open part of the meeting that he would not support moving the gallery from the ArtsPost to make way for a hotel.

The new hotel would rival Waikato-Tainui's two existing hotels in the CBD and their third hotel proposed as part of the The Base complex in Te Rapa.

PROPOSAL

* Plans for a 150-bed, 3.5 to 4-star hotel in Victoria St.

* Capital cost of between $20m and $25m to be funded by the Te Arawa Lakes Trust.

* Art gallery would have to move from the ArtsPost building.

* The hotel is proposed for the city's designated arts and cultural precinct