A conference centre will cost much more than first anticipated but have major spinoffs for Queenstown, a report reveals.
Previous estimates ranged from $20 million to $30m but a new feasibility study estimates a 750-delegate centre will cost a whopping $43.7m.
The study draft, leaked to Mountain Scene, was commissioned by a Queenstown council-appointed working party.
It suggests the Government should be hit up for $20m, council for $17.5m and Otago and Southland regional councils for $2.5m with the balance from private and community funding.
Any land cost is not included.
It’s understood Prime Minister John Key has suggested the Government could stump up $10m.
The purpose of the feasibility study – by three consultancies – was to gauge demand for a large stand-alone conference centre.
The consultants conclude a specialist centre will play a major role in filling local hotels in off-peak and shoulder seasons without any need for more accommodation.
“Outside the peak seasons, there is sufficient capacity to absorb the accommodation requirement of at least one 750-delegate conference each night,” the consultants say.
By its third year they expect the centre will host 156 events including 10 conferences of 500 to 800 delegates and 14 with 250 to 500 delegates.
The report is confident it will attract new business to town.
“There is significant evidence to the effect Queenstown misses out on a substantial amount of conference activity simply because of the lack of suitable facilities,” it states.
Millennium Hotel Queenstown, now the resort’s largest facility, can cater for 550, “however there are reasonably significant constraints once a conference goes above 250 delegates”.
The consultants suggest a centre will pull in $26.4m a year in direct visitor spending in its first five years. At least 25 per cent of visitors will be higher-spending overseas delegates.
The consultants are confident Queenstown Airport will handle demand for conference-goers.
However, they say it will help if airlines use consented night flying hours to make it easier for late-afternoon departures from Australia.
Using international guidelines, the report suggests the centre should be a single-level 5335sq m building with a 1500sq m exhibition hall, 750sq m plenary hall or auditorium and 900sq m in breakout rooms.
The total land requirement, including parking and access ways, is about 12,500sq m.
The authors suggest in the first year the centre will pay $200,000 in rates to the Queenstown council, $450,000 in energy and utility costs, $750,000 in salaries and wages and $350,000, excluding staff, in sales and marketing costs.
It’s assumed the venue’s hire charge will be $18,000 plus GST.
By the third year it could break even in terms of cashflow.
The centre’s key strengths, the report says, will be attracting high-yielding visitors who mightn’t otherwise come, that the conference market’s high period of demand corresponds with low and shoulder seasons, and tourist seasonality will be reduced, enabling more Kiwis to get full-time jobs.
The authors break down the $43.7m capital cost into $30.5m for construction, $5.150m for fixtures, fittings and equipment, $4.635m in professional fees, $891,000 for consents, $400,000 for network user charges and $2.124m in project contingency.
The consultants who wrote the report – which cost the Queenstown council $52,000 – are accounting firm WHK, hotel and tourism specialists Horwath HTL and construction-cost consultancy WT Partnership.
It doesn’t recommend a site.
However, the working party has a shortlist of four – the Gardens ice rick, council-owned Gorge Road carpark and Stanley Street land and a privately-owned Man St firstname.lastname@example.org