Doubt over Rottnest hotel

BEATRICE THOMAS, The West Australian November 11, 2009, 2:15 am

WA TOURISM COMMISSION / UNKNOWN ©
Some of Perth's leading developers have cast doubts on plans for the long-planned luxury hotel on Mt Herschel as the Rottnest Island Authority prepares for a second attempt to find a developer for the project.
The project collapsed in March after more than two years of negotiations when a consortium led by Broadwater Hotels and Resorts pulled out.
Broadwater chief Scott Cogar blamed the failed deal, which came after the consortium invested $1 million, on an 11th-hour decision by the RIA to shift all "hidden" site risks to the group.
RIA chairman Laurie O'Meara confirmed this week that a new tender for the project was likely to be sought in the next two weeks.
Developer Barry Humfrey, whose company made up one-third of the consortium, ruled out tendering. "We've been through that once, and not again," he said.
Mr Humfrey also questioned the level of interest in the development in the current market.
David Kennedy, director of hotels at real estate services firm CB Richard Ellis, said developers would have to overcome challenges such as carting materials to the island and the ongoing costs of running a hotel on an island.
He said hotel developments were hard enough to get off the ground in Perth let alone on Rottnest. "I don't see it being simple at all," he said.
Tom Galopoulos, whose company Saruman Holdings bid for the first tender, said he would be surprised if there was any interest given the short lease offered last time and RIA constraints on the developer.
"People have rung me and I've just told them the same thing. I don't think anyone would be stupid enough, especially in these times," he said.
Seashells Hospitality Group managing director and WA Tourism Council president Paul King said his company would not re-tender and that the Government should build the hotel and lease it to an operator if it wanted it built on the island.
Brookfield Multiplex and Mirvac Fini also said they were not interested.
Luke Saraceni, of Saracen Properties, said he would look at the project but believed hotel operators would be unwilling to pay more than a management fee to run the hotel, making it "unbankable" for developers.
Mr O'Meara, who initially flagged the new tender process to start in May, said the delay was unjustifiable and frustrating but the RIA was "making sure that we get it very carefully done".
He said there had been early interest from companies in the Eastern States and overseas to build the four-star hotel.