Receivership fight splits hotel

The Westin Hotel on Auckland's Lighter Quay. Photo / Supplied

Just over half of Auckland's five-star Westin will be off-limits to guests after a fight between receivers and suite owners.

Out-of-pocket investors fear receivers might disconnect electricity, phone, television and access to their rooms.

Westin, the international hotel operator, will lose control of 110 of the 170 rooms at the Lighter Quay hotel.

Graham Wilkinson, a hospitality expert representing owner/investors of 110 units, said his group was extremely disappointed.

Michael Stiassny, a KordaMentha receiver, said the Westin would stay open but be run "at reduced capacity" with 70 rooms, spa, bar, cafe and conference facilities for guests and visitors, blaming the owners for presenting no reasonable offers and saying he had done everything possible to keep all rooms open.

The offer made was not reasonable and mediation had failed, he said.

But the owners strongly objected, saying they wanted to buy the commercial portions of the hotel which were crucial to its operations but their offer was hardly considered before being rejected.

KordaMentha control the management company which runs the hotel and the company running the bar, restaurant and commercial units.

Wilkinson said owners paid about $80 million and were promised high returns and participation in New Zealand's burgeoning tourism industry.

"The closure of these rooms means that the Westin, which operates the hotel, will shortly have less than 60 units to operate and is expected to shortly lay off up to 100 staff," Wilkinson said.

"The owner's solicitors have been advised that the receivers will try to prevent the 110 owners from gaining access to their property, as well as disconnecting the power, telephone and television.

"There is a very real potential here to badly damage New Zealand's tourism brand, throw into disarray the plans of hundreds of guests booked for the 2011 Rugby World Cup, cost jobs and be a black mark against New Zealand's international reputation as a safe place to invest.

"The owners had obtained an independent valuation of the assets controlled by the receiver and subsequently had made an offer to purchase these but no response was received to it ... This property is New Zealand's premium hotel, in our largest city and we are going to watch a slow destruction in value and a large inconvenience to thousands of guests."

The Westin Lighter Quay Hotel was developed by Nigel McKenna's Melview under a unit title structure with 173 rooms and a variety of commercial spaces with individual unit titles. Melview guaranteed unit owners a fixed return for three years.

But Wilkinson said unit owners later discovered that under their leases they were required to pay an annual rental lease cost of more than $2.5 million for the commercial spaces to Melview but did not receive any income from those spaces.

Melview defaulted on its obligation to pay rent from the hotel business to the owners who put a company into liquidation. The main creditor, Bank of Scotland, appointed KordaMentha to the Melview companies that held the leases of the rooms, he said.