WA’s peak tourism body has hit out at the City of Karratha’s proposal to pump $10 million into a high-end hotel in the centre of town.
LandCorp offered a six-month exclusive working period to the City and Pacifica Developments in April for a plan whereby ratepayer money would be invested in the fit-out of a four-star, 100-room Marriott Hotel built on part of the grassed area at The Quarter.
It is estimated the deal would see the City recover about $20 million in lease repayments and $8.8 million in rates over 30 years.
In a submission relating to the proposal, Tourism Council of WA chief executive Evan Hall said there was no argument for capacity constraints in Karratha, nor evidence to warrant incentives for new developers.
“Tourism Council WA is concerned with the City of Karratha acting as an investor of last resort by investing $10 million, when the site in question has already failed to attract investors,” he said.
“City funding of new hotel capacity would create an un-level playing field and deter future investment in new hotels or upgrades to existing hotels by other investors.
“There seems to be a significant conflict of interest for the City of Karratha to act as both an investor in a competitive market and as a planning and regulatory authority.”
Mr Hall said the $10 million would be better invested in developing cruise ship access, new attractions and effective marketing.
A City of Karratha spokesman said there were signs of room rates rising, and major developments in the pipeline would further boost accommodation providers.
“The Tourism Council is clearly representing its local members as its submission is very similar to theirs,” he said.
“The City does not want to be the position that it was 5-10 years ago when hotel rooms were very hard to get and local room rates were extremely high, effectively restricting tourism access to the town.
Development of a new type of hotel offering in Karratha would generate significant economic and community return through short-term construction and ongoing operational employment opportunities, but also by supporting the nearby businesses and further activating the City Centre.”
A business plan made public in May suggested the City would not incur operational costs, and the hotel would make about $2.76 million profit after five years.
It found most risks associated with the project were low to moderate. The City would become owners of the hotel should Pacifica default on its obligations.
Karratha’s existing accommodation providers have been critical of the project, but several eateries in the town centre have expressed support so long as it does not have more dining options.