By ANNE GIBSON
Problems emerging with Auckland's hotel/apartment property developments are likely to get much worse if the Australian experience is anything to go by, says an industry representative.
Peter Hook, general manager (communications) for the hotel management group Accor based in Sydney, said problems with this type of development had already
come to the fore in Australia. Many had simply reverted to apartment buildings.
He was here for the Mercure takeover of the management contract of Puka Park Hotel in the Coromandel.
"The honeymoon is over for many of the hotel/apartment projects in Australia, because guaranteed rental returns have expired," Mr Hook said, referring to problems at Auckland's Metropolis and decreased returns to investors.
The guaranteed 9.5 per cent annual return for Metropolis investors is due to expire on December 7.
Ascott Metropolis has sent a letter warning investors that income from the hotel rooms may not even cover the investors' outgoings and they could get a bill instead of a payment.
Some Quay West apartments in Albert St, central Auckland, are also reselling for less then the original purchase price, a real estate agent said this year.
Mr Hook said he had seen exactly the same scenario in Australia, particularly at the Goldsborough Mort in Darling Harbour.
There, a rent strike from an owners' action group which had 100 apartments resulted in a revolt against the property's management company.
The investors claimed they had not been paid hundreds of thousands of dollars in rent they were promised from their apartments in the century-old wool store, which was converted into 500 apartments.
The Astor Goldsborough Group managed the hotel aspect of the mixed hotel/apartment building and had forecast that owners would get twice to three times as much net income as investors actually got.
Some were facing bank repossession of their apartments. Owners were going without rent in 1998 when problems were revealed and, instead, got utility bills and a threat to disconnect the water.
Accor also operates Ibis and Novotel hotels in NZ and plans to open a hotel in Queen St in March.
Accor Hotels
Puka Park Hotel
