Fired-up Spencer On Byron investors organise

By ANNE GIBSON

Investors in Takapuna's Spencer On Byron hotel are organising legal action against the Hawaiian-based hotel operator.

The angry investors established an internet chat room last week, after Castle Group's chief executive, Rick Wall, came over from Hawaii to announce that the guaranteed annual returns would be halved to 4 per cent.

During the past few days many investors have joined the real-time chat group, including some living in Hong Kong. They are now examining the feasibility of suing Castle for invoking the force majeure clause in the agreement, allowing it to alter the terms due to forces outside its control.

Wall said that due to the events of September 11 and various airline troubles, tourism's fortunes had declined and this had resulted in the hotel's getting less for each hotel room than expected.

Wall refused to disclose the details, including occupancy rates, but claimed that some of the 250 investors who owned rooms in the hotel were pleased with his announcement and had asked why he had not halved the rate sooner.

But the tone in the chat room is one of anger. "It seems the World Trade Centre was not Osama bin Laden's target at all - he was actually after a Takapuna hotel!" wrote one sarcastic investor.

The investors say they represent the owners of 70 rooms in the hotel and are forming themselves into a committee which plans to meet next week to delegate tasks and plan what to do next.

One of the organisers of the group has also collected a list of owners and plans to write to all investors, asking them to join the group opposing Castle's actions.

The hotel's developer, Covington Group, has also written to investors, expressing sympathy with their plight and surprise at Castle's decision, given high hotel occupancy rates. It proposes to form an action group and has called for expressions of interest.

Covington chief Jim Speedy said his development company owned five of the unsold hotel rooms, which he had hoped to sell. But with the returns halved, he did not expect the sales to settle and said he was shattered by Castle's announcement.

But some of the owners questioned Covington's role in the affair, saying a clear distinction should be drawn between the motives of the three parties - Castle, Covington and the investors.

One of the hotel investors who is not on the internet, Stephanie Slyfield of Takapuna, said she had been counting on the investment for her retirement next year and accused Castle of bad hotel management.

She estimates that she will lose $10,000 a year as a result of the rates being halved.