Villa owners now control their own destiny


Thirty-six Queenstown villa owners have turned the tables on the large Heritage Hotels chain. 

The collective owners of the Heritage Villas on Fernhill Road have snaffled management rights to their units – after blocking Heritage Hotels’ earlier bid for the rights. 

Queenslander Brett Rourke, in town to chair last Friday’s inaugural AGM of the owners’ co-op company, says: “The villa owners are ecstatic. 

“We’ve got 36 owners all in harmony about taking over the management – you wouldn’t normally get every owner wanting to take on the responsibility.” 

Local lawyer Wayne McKeague, acting for the villa owners, says “they’ve gone from being servants to masters of their own destiny”. 

Heritage Hotels already has the existing management deal until 2013 under subcontract from Little Rock Management, a company from the failed stable of bankrupt developer Rod Nielsen. 

However, if the hotel then bought the 50-year management leases Little Rock had with villa owners, “that would have substantially increased Heritage’s power over the villa owners”, McKeague says. 

Owners already had concerns, he adds, such as Heritage and Little Rock sharing 12.5 per cent of gross rental income – high by industry standards. 

McKeague says Heritage could also “pass on every single outgoing and expense to the owners”. 

Monthly financials for two villas for April 2009 obtained earlier by Mountain Scene showed owners collecting just $45 – or 16 per cent – of the average $320 nightly room rate. 

By September last year, when Heritage told villa owners it was buying their 50-year leases from Little Rock for $650,000, McKeague was representing 32 of the 36 owners – many of whom had misgivings. 

“They weren’t saying Heritage can’t manage their villas but if the hotel was going to get 50 years, we needed some changes.” 

McKeague claims Heritage subsequently wouldn’t budge – despite his owners being able to veto the sale of the leases, and despite a long meeting with the hotel chain in November over proposed changes in return for consent. 

McKeague alleges Heritage lawyers flatly refused any changes, which “shocked” owners, many of whom had been comfortable about continuing with the Heritage if relationship changes occurred. 

So McKeague began negotiations with Little Rock mortgagee NZF Money for the villa owners to buy the 50-year leases themselves. 

Once NZF’s conditional deal with Heritage lapsed, the villa owners settled with NZF – also for $650,000 – last month. For $18,300 per villa, McKeague says owners will collectively save $70,000-$100,000 annually – “a better return than the villas themselves”. 

Villa chairman Rourke hopes to “move harmoniously forward with the Heritage”. 

McKeague says if owners are served well, they might renew with the Heritage when its existing management contract expires in October 2013. 

Heritage Queenstown boss Carey Norton did not return calls by page deadline.