Highrise hotel for shore

A developer plans a project for the investment market, Bob Dey reports.

North Shore City is to get a $70 million strata-titled hotel built on Spencer land on Byron Ave, the Spencer on Byron. It will be a joint venture between Oenone Spencer, beneficiary of the land's owner, the Manawanui Trust, and Jim Speedy's Covington Corporation.

Manager of the hotel suites will be a Hawaii company with New Zealand and Japanese connections making its first hotel venture into this country, the Castle Group.

The 249-room hotel will rise 23 storeys on a 4904 sq m site, five levels more than the Byron Tower office block next door.

It will also have six two-storey penthouses of about 170 sq m - not in the $1 million bracket, but down around $700,000.

The hotel project has been two years in the making and was launched to friends of Spencer on Thursday night, with a public launch to investors this weekend.

The "friends and relatives" category is a powerful group - her brothers are John and Peter Spencer, who headed the family's Caxton paper and printing group until its sale in 1988 and continue to have major business interests through private companies.

Construction of the Spencer on Byron is expected to take 18 months, so the hotel should open in about two years assuming marketing success.

The marketing aim has been set lower than the Albert St Travelodge project across in downtown Auckland, where the marketing team led by George Grove first got together before moving on to Covington projects.

Grove says aiming at investors prepared to pay $200,000 to $370,000 for a hotel suite made the Travelodge a slower seller. "We're aiming for $160,000 to $250,000 - the top of the Railway Campus price range," Grove says.

Railway Campus units, in the old Auckland railway station and leased to an Auckland University company, sold out quickly last year.

Some of the suite-style units in the hotel will have a bedroom, lounge and kitchen facilities in their 50 sq m, with a connecting door to a 30 sq m studio.

The budget is based on first-year occupancy of 55 per cent, with an expectation of rising quickly from there.

Prices were still being set this week, but are expected to average $215,000 plus GST for a one-bedroom suite, $142,000 for apartments and $25,000 for parking spaces, with variation according to the floor level.

Castle Group will have a 10-year management agreement, with a 10-year renewal right, and incentives will kick in once they get returns over 8.5 per cent.

Investors will be offered guaranteed returns of 8 per cent for the first two years and 6 per cent for the next eight years.