Investor bails out strife-torn Nelson resort

A Queenstown developer has bailed out Nelson's Monaco Hotel and Resort, which found itself in financial strife because of slow sales, poor hotel patronage and Securities Commission headaches.

Scott Sanders has bought out Rod Duke's shareholding in the $60 million project, the brainchild of former Honest Lawyer Country Pub owner Mike Gepp. Mr Gepp has retained his 50 per cent shareholding.

Mr Gepp said the deal was struck late last week, after a tough winter financially for the business. He would not reveal the value of the deal.

"It's fair to say that we had some cashflow problems through the winter. With Scott coming on board and his connections, being able to raise finance, all those things, we're positive for the development."

He said Mr Sanders' involvement had allowed the project, which was still about two years away from completion, to continue.

Sales had slowed during winter, and he and Mr Sanders now planned to begin overseas marketing of the four remaining villas and the next stage of cottage apartments. Mr Sanders was likely to travel to Hong Kong, Dubai and Australia to promote the project.

Poor domestic tourist numbers had added to the difficulties during winter, Mr Gepp said.

"The hotel, like most businesses in Nelson, struggled through the winter with low occupancy, but we have been full for the last two to three weeks.

"We're expecting a bumper season but winter was pretty tough. There's no domestic market now."

Also, work on parts of the development was stalled because of issues with the Securities Commission.

Mr Gepp said he had had to apply for an exemption to rules governing the use of pooled income.

"The Securities Act was written in the 70s, and it doesn't reflect what people are wanting to do today, which is unit title and pool the income."

Despite the tough year, Mr Gepp said he was now confident about the future of the development.

Shops, a health spa, a pub and a conference centre had yet to be completed, he said.

Mr Sanders has been involved in the development and management of luxury accommodation such as Terrace Downs High Country Resort at the foot of the Southern Alps, and StoneCrest Apartments in Queenstown.

He was out of the country until yesterday and could not be reached for comment.

Mr Gepp said Mr Sanders planned to move to Nelson.

- NZPA