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Domestic tourism refocus perfectly repositions themed accommodation business up for sale

New Zealand’s new-found focus on domestic tourism as a result of Covid-19 related international travel restrictions has perfectly positioned a themed accommodation business on the market for sale.

Coromandel Cottages in the township of Coromandel on the western side of Coromandel Peninsula, is a freehold going concern business comprising nine one and two-bedroom self-contained accommodation units built in an 1800s replica style. The units feature verandah decking facing onto a communal central manicured grass lawn area.

The design and layout out of the cottages, as well as various antique industrial mining equipment and steel machinery parts located around the property, have all be instigated to replicate a pioneering miner’s compound. Located at 1737 Rings Road, the business also consists of a three-bedroom owner/manager’s residence with office space.

Coromandel township traces its commercial-scale gold mining roots back to 1852 when a small find of alluvial gold was panned at Driving Creek just a few kilometres north of Coromandel Cottages. However, it wasn’t until 1867 that a bigger and more lucrative vein of gold was uncovered in quartz rock in the hillside overlooking the outer Firth of Thames.

At its peak in 1898, Coromandel Town and its mining-focused economy sustained some 12,000 residents and 19 hotels. In 1900, the New Zealand Government opened the gold ore processing plant known as the Coromandel Gold Stamper – which refined and smelted ore from 65 different mines in the Coromandel District.

The Coromandel Gold Stamper’s crushing equipment was powered by New Zealand's biggest working water wheel, and was the first diesel-powered gold processing plant in New Zealand. It is this heritage that Coromandel Cottages has sought to replicate in its complex.

Guest shared amenities at the Coromandel Cottages property include a barbeque area, swimming pool, children’s playground, laundry and fish-smoker. Nightly rack rates at the venue range from $153 to $175. In the 2019/2020 financial year the business recorded an average occupancy rate of approximately 67 percent.

Now the 7,753 square metres of freehold land and 630 square metres of buildings at 1737 Rings Road, along with the going concern Coromandel Cottages business, are being marketed for sale at auction on July 16 jointly through Bayleys Hamilton and Bayleys Whitianga.

Salespeople Josh Smith of Bayleys Hamilton and Belinda Sammons of Bayleys Whitianga said that with New Zealand’s tourism sector now focused on servicing the domestic tourism market rather than international traveller numbers, accommodation providers who had developed their business model along the lines of attracting Kiwis were in pole position to benefit from the new societal regime.

“Sitting in the middle of the ‘Golden Triangle’ population centres of Auckland, Hamilton and Tauranga, Coromandel Cottages has always seen the domestic traveller as its core target market,” Smith said.

“That was particularly evidenced as New Zealand came out of level four and three lockdown as recreational travel increased, and people sought out holiday destinations within a two-hour distance from their place of residence. That meant Coromandel Cottages scooped up bookings from Auckland, Hamilton and Tauranga.

“The business owners have invested substantially over the past two years on improving the standard of accommodation – both through the quality of the interior fittings and furnishings, and also the ambience of the buildings and their surrounds. This has been reflected through increases in both the room rack rates and the occupancy levels, which have been improved markedly from previous years,” Smith said.

“With this phase of the business now complete and the business poised to benefit from increased domestic tourism numbers choosing to holiday locally rather than in the likes of Bali, Hawaii or the Gold Coast, the owners of Coromandel Cottages are looking to move onto new opportunities in the accommodation and tourism sector on the peninsula.

“For an off-site owner-operator looking to take on the business, there is the obvious potential to convert the bigger three-bedroom residential dwelling into the accommodation pool – thereby adding another option for guests with bigger numbers in their party.

“The owner/manager’s dwelling oozes colonial character – from the original kauri floorboards, and freestanding red brick fireplace, through to the claw-foot iron bath - and could easily be expected to achieve a high-yielding nightly revenue in the region of $350-$400.”

Sammons said that while the business was functioning well in its current format, there was also an opportunity to grow its revenue through the addition of more accommodation options.

“The property has the potential, subject to appropriate council consents, to add a further two or three more accommodation units onto the site on what was currently underutilised flat grassed space at the rear of the property,” Sammons said.

“The addition of three-bedroom sized family units would add another dimension to the existing accommodation pool configurations.

“Alternatively, but staying firmly with the colonial miner’s theme, the space could be used for creating a glamping accommodation option – combining modern luxuries and guest amenities under canvas which would go some way to replicating the living conditions those pioneering gold miners endured some 150 years ago.”

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