An 18-storey five-star hotel in the heart of Dunedin is a step closer to reality following the signing of an exclusive deal.

It was confirmed yesterday the Dunedin City Council has signed a memorandum of understanding with the hotel's developer, NZ Horizon Hospitality Group Proprietary Ltd, to progress the project.

The deal gave the company exclusive rights to the council's Filleul St site, opposite the Town Hall, where the company hoped to build a $50 million-$75 million hotel complex.

A final decision on whether to build the hotel was expected before the end of the year, once a geotechnical site investigation and other due diligence was completed.


However, the site's zoning and 10m height limit meant a resource consent would also be required, potentially opening the door to another protracted public debate over a high-rise hotel in the city.

Despite that, Dunedin Mayor Dave Cull welcomed the deal, saying a five-star hotel would be a "significant" coup for the city.

Project spokesman and architectural designer Ken Taylor, of Dunedin, said the hotel would be a boost for the city's conference venues, including at the Dunedin Centre and Forsyth Barr Stadium.

It would also bring new jobs to the city, improve its accommodation capacity for big events and help attract more wealthy, high-spending guests, he believed.

"It's a five-star hotel. It's not in competition with anything else around the city. It's in a class of its own," he said.

The project plan envisaged 200 five-star hotel rooms, 42 apartments, 10 penthouse suites, two restaurants and a bar, plus office space, a business lounge and car parking.

Also included was a hot pool complex to be built beside the main building, covered by a transparent and retractable roof, which would be open to the public.

The hotel would be run by an international hotel chain, although the name of the potential operator remained under wraps for now.

Mr Taylor also declined to name the hotel's principal developer yesterday, saying the man wished to remain anonymous, but the ODT understands he is Anthony Tosswill, of Tekapo.

Companies Office records listed Mr Tosswill as the sole director of NZ Horizon Hospitality Group Proprietary Ltd, and showed he was also behind the Tekapo Lake Resort and Tekapo Sky Hotel developments.

Mr Tosswill's other property interests were understood to include ownership of a Malaysian resort, while his Linkedin profile mentioned plans for 12 hotel projects, worth $500 million, across the South Island.

He also had links to a Chinese company, Xiangbo Trustee Ltd, which was also involved in his Tekapo developments, Companies Office records showed.

Progress on his Dunedin hotel came more than a year after talks between the parties began, and nine months after the Otago Daily Times first reported an anonymous developer was interested in the site.

It also came two years after a bid by Betterways Advisory Ltd to built a 27-storey hotel on Dunedin's waterfront was scrapped after the relationship with the council descended into acrimony.

Mr Taylor accepted the proposed Filleul St hotel's height would also be a concern for some people, but hoped most would be "excited" by the project.

The developers had been in ongoing discussions with council staff over aspects of the project, including its design, which it was hoped would be sympathetic to the city's heritage, Mr Taylor said.

The design's "verticality" aimed to reflect the city's gothic architectural heritage and the hotel's surroundings, including the nearby Town Hall, he said.

Three of the building's 18 storeys would also be mainly below ground, cut into the sloping site and reducing the overall appearance of the building's height.

"We're doing out best to address the issues first," he said.

However, the hotel's height would still rival Dunedin's tallest building - the 56.3m-high First Church - with its top floor sitting about 10m below the top of the church's spire.

Mr Cull said the council also wanted a "sympathetic" design, which could be an issue for the resource consent process.

"It's too early for it to be an absolute requirement, but it certainly would be an expectation," he said.

He was impressed by the developer's approach to date, saying talking through issues before lodging a consent "bodes very well for our future relationship".

The council had rolled out the red carpet by agreeing to pay for geotechnical work on site, costing between $30,000 and $50,000, the ODT understands.

The company would have to buy the site at market value, but would also receive relief from development contributions, worth $1 million, if the project proceeded.

Mr Cull said such incentives were designed to encourage the project and would pay for themselves in time.

"In the long-run, if the hotel gets built and it's of substantial size, you get maybe $1 million a year in rates. You wouldn't have got that if the hotel didn't go up."