KEY POINTS:
A New Zealand developer is attempting to revive the ill-fated Sheraton Hotel in the Cook Islands which has been a white elephant since work stopped in the 1990s.
A spokeswoman for McEwan Group said the business had commissioned Fletcher Pacific to start work on the abandoned hotel in
Rarotonga, a property which it was once hoped would represent economic salvation for the Cook Islands.
Work might start early next year and rooms could be ready for the first guests in 2009 - exactly 16 years since the partly finished hotel was abandoned.
The hotel nearly bankrupted the Cooks Island Government and in 2003, Rarotonga's Sheraton was known as the Vaimaanga Hotel.
The history of the project dated back to 1987 when the Cook Islands Government signed a $52 million deal with an Italian bank. The Italian Government insured the deal and an Italian contractor began work on the development and then went broke.
So another Italian company took over and by 1993 the 200-room luxury hotel was all but complete when Rome pulled funding amid allegations of Mafia-related corruption, according to Cook Islands Prime Minister Geoffrey Henry.
But now new plans have been hatched to finish the hotel and draw investors into buying rooms there.
McEwan Group said it had formed a joint venture with Tepaki Group to lease the site on a 60-year term.
McEwan has also had talks with international hotel chains about running the property and said once work was finished, it would open the hotel as the Hilton Rarotonga Resort & Spa.
A spokeswoman for McEwan said the property would have 160 suites and 50 apartments available for sale to investors for $385,000 to $2 million with guaranteed rental returns. Some properties had already been sold, she said.
"The hotel is being completely retro-fitted from the concrete structure," she said. "A lot of ground work has been done in terms of tidying up, demolition and putting in an unsealed road to the rear and a completed showroom. The logistics are almost complete and main construction is due to start in the New Year."
Dan McEwan, founder of McEwan Group, said some of the hotel had deteriorated and had been cleaned out.
"You're talking new rooms, doors, windows, tiles, electrical and plumbing. We're taking it back to the bare bones and going through the architectural process which needs to be signed off by Hilton's team. We've almost completed that."
Initial deposits had been received on the sale of 45 apartments, he said. Some new apartments will be developed but some were already on site.
The hotel could be worth $100 million when it's finished and could generate $27 million annually.
Fletcher is expected to have about 250 people on the site and the hotel will employ about 300 local staff when it is opened.
McEwan said Rarotonga had a scarcity of good accommodation and the site's location was appealing - on a beach front and with a lagoon.
The developer has signed agreements for Hilton to manage a further three hotel projects. Developments in Wellington and Queenstown were still awaiting resource consent but a new Hilton in Dunedin would open in late 2009.
The McEwans are not the first New Zealanders to take an interest in the old Sheraton.
In 2003, former Auckland property developer Mark Lyon also announced he had plans to buy the property.
During one of two hearings in the Auckland District Court in which he faced charges of unlawful possession of a pistol, four knives and ammunition, Lyon revealed his plans to invest in the "failed and abandoned" complex. At the time, he had secured work and resident permits for Rarotonga and said he would stay for at least a year to get the Sheraton "up and running".
But residents of Rarotonga soon called for Lyon to be put on a plane back home.
Dan McEwan said his group was working on plans for the hotel at the time Lyon was expressing his interest in the property.
WHAT INVESTORS GET
McEwan Group is tempting investors to buy in Rarotonga:
* Pay from $385,000 to $2 million for a room or apartment.
* Get 28 days a year staying in the property.
* Get a guaranteed rental return of 6.5 per cent for one year.
* Take a three-year guaranteed return at 5 per cent.