Cotswold Hotel sale a rare chance to buy into market

The Cotswold Hotel has 63 rooms and conference, food and drink facilities for more than 200 delegates. Photo / Supplied

The Cotswold Hotel, one of Christchurch's landmark hospitality establishments at 88-96 Papanui Rd, is being offered for sale through Jones Lang LaSalle Hotels with an international campaign calling for expressions of interest closing on December 3.

"This is the largest hotel to be formally offered to market since the Crowne Plaza Christchurch sold to the Australian Fund Eureka in June 2008," says Dean Humphries, national director of JLL Hotels, who is marketing the hotel with colleague James Gatland.

"There have been few opportunities in the past 18 months to purchase hotels, particularly larger hotels over 50 rooms, given they are tightly held by generally well-capitalised habitual hotel investors, and this presents a rare opportunity for new investors to enter the New Zealand hotel market," Humphries says.

The Cotswold Hotel comprises 63 rooms with conferencing, food and beverage facilities for more than 200 delegates and a swimming pool. The complex is spread over 7096sq m of land encompassing six separate freehold titles. There is also the opportunity to purchase an adjoining 13-unit motel if required.

Humphries says there are two new 4.5-star hotels coming on stream in Christchurch early next year. "However, the Cotswold Hotel, with its established clientele and mid-range status, is operating in a business and leisure market mix comfortably below higher-rated inner-city internationally branded hotels that are located in the central business district.

"This hotel also offers a potential purchaser a range of value-added and alternative use opportunities, including the ability to hold as a passive high-yielding investment, owner-operate the hotel, on-sell the land and buildings and business or convert the hotel into alternative uses such as residential or aged care."

Humphries says a component of the hotel located directly across Papanui Rd sold last year to the Cancer Society of New Zealand and was now utilised as accommodation for hospice patients and their families. Other examples of hotels being purchased for an alternative use included the recent sale of Hotel Du Vin in Auckland, which sold to the Dilworth Trust Board for education purposes and Queenstown Lodge, which was sold to a tourism college.

"The current market provides investors and owner-occupiers with a range of opportunities to acquire assets at well below replacement cost, many of which could be utilised for alternative uses," Humphries says.

Brendan Taylor, managing director of Scenic Hotel Group, which has appointed JLL Hotels to sell the property, says the hotel had been earmarked for divestment for some time as it was no longer part of Scenic Hotel's core business. "The Cotswold Hotel has been part of Scenic Hotel's portfolio for 20 years and has been a constant and proven performer over this time," says Taylor.

"The notable shortage of hotel assets currently being offered to the market and the recent flurry of sales activity in Australia has given us the confidence to test the market. A new owner has the ability to reposition the asset to benefit from some exciting business opportunities including the Rugby World Cup in 2011 in which Christchurch will host five pool games and two quarterfinals.

"Annual events such as the Ellerslie Flower Show are also becoming strong business generators to the region," Taylor says.

Humphries said the hotel was being sold with the option of retaining Scenic Hotel Group as manager.

"This is a good opportunity for an investor to acquire a fully serviced hotel with an established historical trading record and sound client base," he says.