Construction of the new hotel will be completed in two stages, the first featuring 80 guest rooms, function/conference facilities, restaurant, bar, café and carparking. Photo Getty

A new $40 million, 120-room inner-city hotel is to be built in Invercargill by the Invercargill Licensing Trust.

General manager Greg Mulvey confirmed today a hotel, probably six storeys high, would be built on the corner of Don and Dee Sts – a site already owned by the trust. A recently-signed contract for the purchase of nearby 11 Don St completes the property acquisition required.

“We’ve been living and breathing this and it’s fantastic to finally say ‘we’re doing it’,” he said.

Board chairman Alan Dennis said the multi-million investment reflected the trust’s faith in the city’s future.

“The time is now right and it’s our belief this will act as a catalyst for further inner city developments and rejuvenation,” he said.

The board had approved a budget of up to $40 million for the flagship property.

“The design will influence the final number but ultimately this will be an asset the city can be proud of and one which will help Invercargill continue to grow as a destination. Our vision is for this hotel to have the wow factor,” Mulvey said.

Construction of the hotel would be completed in two stages, the first featuring 80 guest rooms, function/conference facilities, restaurant, bar, café and carparking.

Stage two with an additional 40 rooms would follow when demand warranted it.

“We’re reluctant to put a finish date on it because the timeline relies on other parties but what we can say is that we’re starting today,” Mr Mulvey said. “We’ve been advised the physical build itself will take 18 to 24 months.”

Obtaining demolition consent from the Invercargill City Council was a vital first step to allow the project to commence.

Extensive feasibility studies had been completed since the trust first considered the idea over five years ago.

“For several years the Trust has eyed this opportunity but it had to make commercial sense to do it. Up until now we couldn’t justify it,” Mr Mulvey said.

“Nationally there has been strong growth in tourism in the past few years and, more importantly, that’s forecast to continue.

“The reality is Invercargill hasn’t enjoyed the explosive growth we often read about but we have faith we will continue to benefit from the spill over experienced during the past year from Central Otago and that has given us the courage to do this. It’s also imperative our city is effectively marketed and promoted as a desirable destination.”

Consulting with urban planner Kobus Mentz, the Trust investigated the viability of several key CBD sites, including the former Southland Times building in Esk Street purchased last year. However, the corner of Dee and Don Streets emerged as the optimal location for several reasons, including the capacity to futureproof, internal access carparking and vehicular egress.

“When we completed our financial analysis and took all factors into consideration, the chosen site was undoubtedly the best option, particularly given the synergy to other proposed developments for the CBD,” Mr Dennis said.

“Location, location, location – this will have a real visual impact when people come into the city.”

The last hotel added to the Trust’s accommodation repertoire was Ascot Park in the late 1970s, while the Kelvin Hotel opened in the CBD in the 1960s.

“We’re proud to still be staying true to our original mandate of 1944 to provide quality accommodation for the city of Invercargill,” Mr Mulvey said.