Top films drive NZ tourism bonanza

By ANNE GIBSON

London-based InterContinental Hotels Group is so confident in the economy here that it wants to spend $700 million in New Zealand and the Pacific Islands to expand its regional presence.

InterContinental's regional operations director, Bill Sheppard, yesterday announced that deals would be signed within three years to build three new Holiday Inn Hotels and two new Crowne Plazas in New Zealand.

Rocketing visitor numbers, the spin-off from The Lord of the Rings trilogy and interest generated by Whale Rider were making the region a focus for global groups like InterContinental, Sheppard said.

"This is particularly the case with families and there's a growing need to accommodate them," he said.

"Their decision to come to New Zealand is driven by their children and the pester power involved," he said, citing the United States and Europe as the primary source of these visitors.

"We've had the first wave of interest, but the launch of the third movie ine the Lord of the Rings trilogy will create another wave.

"These movies have had a dramatic effect on the leisure segment out of our key markets."

Areas being considered for the five new hotels are Auckland's central business district, Wellington, Christchurch and Queenstown.

The expansion would create 1000 new rooms, Sheppard said.

The group was also negotiating for a new Crowne Plaza in Fiji and was in talks for a new InterContinental Resort in Noumea, Sheppard said. This would create a further 600 to 700 rooms in the islands.

"We're very optimistic about New Zealand and its 10 per cent annual growth rate compared to 5 per cent globally."

The announcement delighted Tourism Minister Mark Burton.

"There's serious confidence in the long-term path of our tourism industry which will become our number one export earner," he said.

"We've not seen expansion within a single group of this magnitude before and it's certainly very positive news."

InterContinental operates a Holiday Inn in Wellington, Crowne Plazas in Auckland and Christchurch, an InterContinental in Wellington, a Parkroyal in Queenstown and Centras near Auckland Airport, in Rotorua and in Christchurch.

Sheppard, based in Wellington since March, is already overseeing the start of the expansion which he said was worth $150 million.

Construction of a new Holiday Inn Hotel in central Wellington is expected to start early next year after being delayed a year. The 16-level 192-room hotel, being developed by Melview Developments of Auckland, is planned for the corner of Featherston and Whitmore Sts on a 5500sq m site.

But Gordon Wilson, chairman of the Major Accommodation Providers organisation, said hotel room rates were well below a level that warranted substantial investment in New Zealand and although he wished InterContinental the best, he had doubts about the expansion.

"With all due respect, if I had a dollar for every time someone said they wanted to build a hotel in New Zealand, I'd be a very rich man," he said, citing Marriott and Hilton as groups which had expressed an interest in expanding here.

High construction costs, relatively low room rates, hotels' dependence on airline policy, the high cost of land and the outlay associated with new hotels made new ventures costly, Wilson said.

He said internal rates of return on hotel investments made new products prohibitively expensive.

He questioned the ability of operators to get an acceptable income from a new investment.

Foreign visitors spent $6.14 billion in New Zealand last year, according to the Ministry of Tourism.

The company

* InterContinental Hotels Group is world's largest hotel owner.

* It is listed on London and New York stock exchanges.

* It manages, leases or franchises more than 3300 hotels with 515,000 rooms.

* Operates in 100 countries.

* Third-quarter group net profit was €84 million ($158.3 million), up 16 per cent.

InterContinental Hotels Group