Cost structure 'inflaming Westin war'

The Westin is embroiled in a standoff. Photo / Chris Skelton

An international hotel broker has called for a truce at Auckland's Westin.

Dean Humphries, national director Jones Lang LaSalle Hotels, said it was important that an impasse between two fighting factions be resolved.

"The unit holders and the receiver, who controls the management rights and some of the other common components of the hotel, must reach a suitable compromise," he said.

Half the Lighter Quay's rooms will be off-limit to guests after a fight between investors and receivers KordaMentha.

Humphries said Westin was a popular and highly successful hotel in terms of revenue generated.

"The problems must lie with the underlying cost structure. There are many layers of costs in a hotel operation before the hotel unit holders finally get their return: day-to-day operational costs but additional costs at The Westin such as multiple management fees, ground rent (leasehold tenure) and fixed rentals for other components of the hotel such as the food and beverage, lobby and other parts of the hotel.

"It would appear that after all these costs have been taken off, there is virtually nothing for the individual hotel unit holders. The solution must be a restructuring of the hotel's cost structure and this will mean a compromise by all parties.

"However, it is the individual hotel unit holders whose rooms generate by far the most revenue ... who should receive the largest proportion of the profit and not those components of the hotel which show the lowest returns (food and beverage) or those components that are non-profit centres such as lobbies," Humphries said.