Hastings District Council is considering investing up to $5 million of ratepayers' money in a central city hotel it believes will provide a vital boost to the local economy.

The scheme would involve the council being part of a joint venture with hotel operator Scenic Hotel Group - owner of Napier's Scenic Hotel Te Pania on Marine Parade - and other, as yet unnamed, investors.

Hastings Mayor Lawrence Yule said the council had looked at about half a dozen hotel proposals in recent years but the one currently on the table - for an $18-19 million development with about 100 rooms - "was the most advanced and the stars are the most aligned".

The council has included the proposal in its 2014-15 annual plan, the budgeting blueprint that goes out for public consultation in a week's time.


The hotel development is one of the council's "initiatives for a vibrant CBD".

In its draft annual plan, which forms the basis for public submissions, the council says a CBD hotel "has for some time been considered an essential piece of infrastructure that has been lacking in Hastings".

Mr Yule said Hastings was one of the only provincial cities of its size that did not have a CBD hotel.

Such a facility was vital to support the accommodation needs of conference and event attendees at the CBD's Opera House, he said, regardless of the issues faced by the Opera House, which is currently closed, while being assessed as earthquake prone.

"We consider this a strategic investment based on the support it will add to Hawke's Bay Opera House and its buildings and the conference centre.

"We get a significant amount of feedback that a big drawback is the lack of a hotel within walking proximity [of the Opera House]."

Mr Yule said the council was proposing making a shareholder investment in the project to get it off the ground, but did not intend to be in the hotel owning business long-term.

He likened the proposal to that being considered by the Hawke's Bay Regional Council with the Ruataniwha Water Storage Scheme project.


The regional council is proposing a "BOOT" or "build, own, operate and transfer" model, which would see it initially part-fund and control the scheme but eventually sell out to the private sector.

The draft plan - which is subject to amendments after public consultation - sets out the council's budget for the coming year and is proposing a 2.7 per cent increase in the district's total rates take.

The plan will be released for public consultation on March 29, with submissions closing on May 11.

The council will hold hearings on the plan from June 5 and the final version will take effect from the start of the council's new financial year on July 1.

"What we're signalling with this plan is we're wanting to have a conversation with the community around whether a strategic investment in a hotel - whether it's in cash or in kind at that sort of level - is something they have comfort with in relation to the growth of the city and the region," Mr Yule said.

Hawke's Bay Today last week reported work had begun on a 21-room waterfront hotel and conference centre at East Pier in Ahuriri, Napier.