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Hot Topic NBR Focus: GMO
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New hotel for Auckland Airport

Auckland Airport has struck a deal with Accor to develop and operate a new $20 million hotel at the airport in time for the Rugby World Cup 2011.The airport, which released its interim results this morning, said the new 120-room Formule 1 Hotel would appe

Andrea Deuchrass
Fri, 26 Feb 2010

Auckland Airport has struck a deal with Accor to develop and operate a new $20 million hotel at the airport in time for the Rugby World Cup 2011.

The airport, which released its interim results this morning, said the new 120-room Formule 1 Hotel would appeal to the budget traveller market and provide more choice to travellers.

The new hotel will be one of several property developments (some underway), including the Warren & Mahoney-designed four-star plus Novotel hotel, a 2000 square metre office building and a major relocation for New Zealand Customs.

The airport's spin doctor Richard Llewellyn said the projected $15 million to $20 million cost had been factored in to the company's planned capex.

The new hotel, which architectural firm Jasmax would design and Accor would operate, was likely to sit close to the airport's retail centre. "We have not confirmed the site yet, but it's likely to be quite central."

The airport did not know when construction would begin, but said it would be up in time for the RWC. "It will probably start in two to three months, once we have conditions in place such as our construction partners."

An artist impression of the new Formule 1 hotel

Earnings flat

Auckland Airport (NZX:AIA) recorded a flat operating ebitda for the six months to December 31, at $138.8 million. Total revenue was down 0.6% to $182.9 million, as a result of a slight slip in retail earnings.

The company said in a statement the construction work in the departures area and two duty free operators contributed to the drop in retail earnings.

Airlines chose smaller aircraft in the period and reduced movement, resulting in a lower airfield income.

The airport’s capital expenditure was $27.8 million for the six months to December and is expected to be between $60 million and $65 million for the full 2010 financial year.

The company reported its unaudited interim results when it announced its bookbuild.

This morning directors announced a fully imputed dividend of $3.75 cents a share, the same as last year’s interim dividend. It is also offering New Zealand shareholders an opportunity to reinvest, through its dividend reinvestment plan.

Trans-tasman growth

Trans-tasman growth pushed passenger volumes up 2.3% in the six months to December 31, to 6,782,242, although total aircraft movements were down 2.9%.

Strong competition in the domestic market drove a 6.1% rise in domestic passengers to December 31, reflecting the up-take of low-cost alternatives with a focus on main trunk routes.

However, a drop in the long-haul market offset trans-tasman growth. International passengers were up 1.4%, largely due to more available seats and competitive airfares.

Chief executive Simon Moutter said growth was key. “Auckland Airport has had a new growth strategy in place since March 2009. We believe that even in difficult times, growth is an essential airport focus.

“Growth is about creating value by building stronger air services connections, growing passenger volume, gaining exposure to higher growth markets and influencing travel and customer behaviour.

“International passenger volume is by far our most important value driver and with each international traveller spending an average of $2,500 during their visit to New Zealand, more volume is good for our shareholders and good for the broader New Zealand economy.”

Outlook
Auckland Airport said passenger volumes were improving, but they were hard to accurately forecast. The second quarter for the 2009/10 financial year showed solid evidence of a market recovery, it said.

The company said it had good reason for confidence, with passenger volumes more than its high case assumptions.

Net profit after tax for the full 2010 financial year is expected to be in the $100 million to $105 million range.

Auckland Airport shares last traded at $1.86.

Andrea Deuchrass
Fri, 26 Feb 2010
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New hotel for Auckland Airport
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