SkyCity Entertainment Group's ambitions for a new southern five-star hotel took a step forward today when it won approval to buy a Queenstown site.

The Overseas Investment Office has granted consent for the business, 46 per cent Australian-owned, to buy a 1.01ha site at 633 Frankton Rd.

READ MORE:
SkyCity's big Queenstown land buy up: official clearance sought from state agency - investor presentation

"The applicant intends to use the land to develop a five-star hotel that will complement its existing entertainment facilities in Queenstown and help attract international visitors," the OIO said.

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SkyCity operates a Queenstown casino on Beach St and has SkyCity Queenstown and SkyCity Wharf.

But it has long planned a big expansion in the tourist mecca and today's approval means that can now progress.

SkyCity has consent to buy the land from New Zealand's Passion Cove for $16m. The land is classified as sensitive, hence the application.

Last month, SkyCity has told investors in Sydney that it has applied to the office for clearance to buy Queenstown land for a big new development.

"Land acquired for future hotel development in Queenstown - OIO application being review," said the presentation to the Macquarie investment conference, posted on the NZX.

No specific site, area or address was provided by SkyCity last month.

But the Herald said in May that the site was most likely on the lakefront at 633 Frankton Rd between the airport and the centre of the resort hub.

At last October's SkyCity AGM, chief executive Graeme Stephens said the business was looking to "do more" in Queenstown, particularly to cater for international business.

"We think it needs one [hotel]," Stephens said.

The business has extended its lease on its casino in Queenstown by three years. The lease was due to come up for renewal this year, SkyCity said.

SkyCity said its Queenstown operations had resulted in international business rising 18 per cent during the latest six-month period "highlighting attractiveness of location for premium/VIP customers."

That showed the potential for the business to further leverage big-spending customers.

Total revenue from Queenstown operations was $6.5m in the 2019 first-half financial year, SkyCity said, up from $6.4m previously. SkyCity got $3.3m from gaming machines in Queenstown, $2.4m from tables and $800,000 non-gaming revenue, it reported.

SkyCity shares on the NZX are trading around $3.72 today.