Sale of Queenstown hospitality business

Garden Court Suites and Apartments at 41 Frankton Rd, Queenstown. Photo / Supplied

Brokers say placing a profitable Queenstown accommodation business on the market provides investors with an opportunity to capitalise on the city's tourism boom.

Garden Court Suites and Apartments has 54 suites and apartments (one- and two-bed studios, plus two-bedroom units), which enables it to capture all levels of the market, say Colliers International brokers Steve McIsaac and Barry Robertson.

They are marketing the business, within leased premises, for sale by negotiation, with McIsaac expecting interest from accommodation managers and hotel operators.

"This business has a long lease on 41 Frankton Rd, which comprises the 23 suites; while there are long-term management rights over the 31 individually owned apartments at 3-7 Adelaide St.

"It is a long-established accommodation operation, occupying a prime Queenstown location just four minutes' walk to the central shopping district."

Recent figures show continued growth in the South Island, with guest nights up 6.3 per cent for the year ended November 2018, McIsaac points out.

"International visitors to New Zealand over the same period totalled 3.85 million — up 4.6 per cent on the previous year. And more tourists means greater revenue, with visitors spending $2.31 billion with regional tourism operators in Queenstown in the year ended October 2018 — up 10.2 per cent on the previous year."

The business for sale is at present run by its Christchurch-based managing owner and employs an on-site manager, reception, housekeeping and maintenance staff.

Garden Court manages bookings through its own website, as well as third-party sites such as bookme.co.nz and expedia.co.nz, which provide some 35 per cent of bookings.

Robertson says the business is "sitting pretty" on the main route leading into Queenstown.

"It is next to other hotels and apartments, as well as new hotels under construction, which is testament to the strength of the location.

"Its three buildings comprise the suites and two stages of apartments on a 4331sq m total site.

"The complex includes 17 two-bedroom apartments, 22 one-bedroom apartments and 15 studio suites. This provides a total of 71 rooms, making the property attractive to operators looking for a good level of scale," says Robertson.

He says the 41 Frankton Rd property has 21 years remaining on its lease.

Meanwhile, the 31 individually owned apartments at 3-7 Adelaide St are on individual management contracts (overseen by two body corporates), with 35 years remaining on their contracts.