Site work starts on new airport hotel

The airport will have a 20 per cent stake in the $80 million hotel, which is due to be finished in time for the Rugby World Cup in 2011.

Auckland Airport hopes work on its joint venture hotel next to the International Terminal will start in December.

Preliminary site work is under way for the $80 million hotel, expected to be finished in time for the 2011 Rugby World Cup.

At the airport company's annual meeting chief executive Simon Moutter said the hotel was the first project in an accelerated property development programme.

The airport earns around 55 per cent of income from its non-aeronautical business (including retail) and has around 50 years' supply of prime commercial and industrial land available.

The hotel is a new approach to development for the company, given that it will have a 20 per cent stake in the 260-room four-star-plus property. The other partners are Tainui Group Holdings and Accor Hospitality. Traditionally the airport has not taken a direct stake and simply charged ground rent.

Moutter said the project was conditional on financing and getting a construction bid that fitted the business case.

"They were both conditions we were confident about. We're now clear we've got a path to finance and we just wait for construction bids.

"If we get a bid that fits inside the envelope we'll be all go."

Chairman Tony Frankham said the company was on track for an after-tax profit of between $93 million and $100 million in the 2009/10 financial year. "Forecasting is difficult when global travel demand conditions are unstable and passenger volume growth remains uncertain."

For the first three months of this financial year international movements were up 1.2 per cent to 1.6 million and domestic passenger movements up by 5.1 per cent to 1.5 million.

Frankham said the company would continue to remain "fully engaged" with the Commerce Commission consultation process that is working towards a new information disclosure regime at Auckland, Wellington and Christchurch airports.

Any regulatory regime covering what the company can charge in landing fees needed to take into account the airport's role as a tourist gateway.

Frankham said that for every million passengers arriving, $2.5 billion was pumped into the New Zealand economy.

"We do not wish to become mired in debates among economists and lawyers and risk losing sight of the bigger prize; that is, our potential to contribute to a recovery from recession by stimulating trade and tourism."

In response to questions about access to the airport, Frankham said he shared the frustration of fellow commuters.

"I find the transport from the airport to the city most infuriating as more often than not I leave the airport at five o'clock and get clogged up and take an hour and a half to reach the city."

Auckland Airport shares closed down 1c at $1.97.

Priority pool

A priority pool has been set up for Auckland Airport shareholders who want a slice of a $125 million bond offer launched this week.

Shareholders may take up bonds up to a maximum of $50,000 per shareholder application from the $5 million priority pool.

The bond offer is the third in over a year and would be used to pay bank refinancing due in March next year.

The interest rate on the bonds has been set at 7 per cent for the term of the bonds, which mature in November 2014.

The airport company announced yesterday that it would establish a dividend reinvestment plan and would release details of it shortly.