NZ’s first modular hotel leased as Arden

7:12 PM Friday May 10, 2019 True Commercial

The 88-room modular hotel under construction on the corner of Colombo and Salisbury Sts, Christchurch. Photo / Supplied

The lease on New Zealand’s first modular-build hotel has sold ahead of the premises opening in Christchurch for business.

Located in the city centre at the corner of Colombo and Salisbury Sts, the five-story, 88-room property has a 4-star Qualmark rating.

It is to open as the Arden Hotel, following a lease agreement between Christchurch developer Gary Le Pine’s Lepdon Holdings company and New Zealand-based hotel operator Golden Grand Trading.

Golden Grand Trading has committed to a 15-year lease on the property, with two further rights of renewal, in a deal brokered by Bayleys Real Estate hotels and tourism directors Nick Thompson and Paul Dixon.

The men say regrowth of Christchurch’s commercial accommodation sector took a protracted hit following the 2011 earthquake.

“Before the quakes there were 3900 three-to-five star branded hotel rooms in Christchurch. Post the quake that plummeted to less than 1000,” says Thompson

“Now it’s back up to 2700 rooms, with an additional 400 planned to come on line in the coming 12-months. That’s still at an inventory lower than before the quakes so there is still plenty of capacity in the market – as identified by Arden’s operator.

“With properties such as The Hotel Grand Chancellor, the All Seasons Christchurch, the Heritage Towers, the two Millennium-branded hotels, the Best Western Clyde, the Holiday Inn City Centre and the Holiday Inn on Avon taken out by the quakes, there has been a hole, which this Arden Hotel will ultimately help fill.”

The 1300sq m hotel, was built in a Vietnamese factory then shipped to the site — Cnr Colombo and Salisbury Sts — in 17long double room and corridor modules.

Shipping took about four weeks, comprising about seven per cent of the building's cost. Room modules included all fixtures, fittings and furniture — right down to bathrooms and painting.

Data analysis from Bayleys indicates that over the past two calendar years, construction costs on large commercial projects rose between 6 and 8 per cent annually — cutting into developers’ margins.

But Thompson says the modular construction was 10 to 20 per cent cheaper than traditional commercial builds. Raw materials cost 30 to 70 per cent less than New Zealand alternatives.

“Electrical cabling was the only component bought here. Arden hotel builder TLC now has two further 200-room hotels to build in its Vietnamese factory for sites in Queenstown,” he says.

“Lepton Holdings had been looking for a prefab’ manufacturing contractor in Asia as the company simply couldn't make a traditionally-built hotel stack up financially.

“Less on-site handling reduced traffic disruption and dust nuisance, while the pre-built sections enabled a quicker finishing of the external facade.”

Dixon says less than 10 per cent of New Zealand hotels, sustaining a minimum of 80 rooms, are on lease agreements.

“Christchurch hotel returns have remained relatively flat over the past seven years — even with the city’s room inventory remaining well below what was available prior to the 2011 earthquake,” Dixon says.

“In-bound tour companies and the domestic meetings/incentives/conference sectors are reluctant to feature Christchurch on their packages and itineraries — partly because there are fewer venues to accommodate large groups, and partly because supporting tourism and event-hosting infrastructure is in a rebuilphase.

“With both those pillars now firming up, the upward economic cycle is feeding on itself. Larger visitor groups are coming back to the city. Supporting infrastructure is coming to the fore, such as the new convention centre due for completion at the end of the year is coming.

“The Arden Hotel is part of the bow-wave of tourism regrowth in the city.”

The chief executive director of Arden Hotel, Danny Kodoor, says the hotel operators, are excited to be part of a landmark and innovative project, bringing the best of international technology to Christchurch.

“The city has had its share of challenges and, as we bounce back, we are proud to be associated in a small way of the rebuild of this vibrant city,” Kodoor adds.