A proposed $147 million nine-storey Tauranga hotel and conference centre is a step closer to reality as details of what it could mean for the city are revealed.

If approved, it would be built at 21 to 41 Durham St, commonly known as the former TV3 site, as part of a second tranche of the civic precinct Te Manawataki o Te Papa masterplan.

In a Monday meeting, Tauranga City Council commissioners gave staff the green light to carry out a $200,000 business case on the hotel and conference centre proposal.

A report by chief financial officer Paul Davidson and principal strategic advisor Sarah Stewart said the conference centre could support 60 jobs a year for the next 60 years. They estimated the project could be worth $58.8m in benefits to the city.

However, funding and financing were “a significant barrier to delivery of this project” and it would rely on external funding, they said.

A breakdown of indicative development costs showed construction of the hotel was going to cost $57,840,000 and convention centre $30,500,000, in addition to a combined $16,870,000 in contingencies, $19,070,000 in consultants and $910,000 in overheads and other costs. Set up and consent, piling, infrastructure and external works were also financial factors. However, it was not yet known what the anticipated operational costs were.

The proposed nine-storey design included a podium reception and restaurant with sea views. The conference centre was expected to host up to 500 delegates and was proposed to “underpin the occupancy of the hotel”.

The hotel would have 164 rooms, including 19 larger suites. The complex would have hotel and conference lobbies, a conference room, meeting rooms and break-out spaces, parking spaces and loading bays.

An artist's impression of a proposed hotel and conference centre in Tauranga's CBD, as part of the Te Manawataki o Te Papa project. Image / supplied

“Together, the hotel and conference centre will attract a high proportion of out-of-town guests, contributing a net economic gain to the city and the wider region, enabling future growth by stimulating investor confidence,” the report said.

With the new museum, the complex would enable Tauranga to attract more events, functions and conferences – “helping to inject vibrancy, activation and life back into the heart of our city centre”.

There would be flow-on benefits for other businesses, including hospitality, and for Tauranga’s reputation.

A comparison of hotel rooms in Rotorua and Hamilton showed Tauranga lagging, particularly behind Rotorua.

Initial plans from 2022 of where facilities could go as part of the Te Manawataki o Te Papa. Graphic / Tauranga City Council

Tauranga has nine hotel establishments, offering 494 rooms. Hamilton’s eight hotels had 687 rooms and Rotorua’s 22 hotels had 1828 rooms.

A Willis Bond study of the project’s feasibility highlighted “strong operator demand” and “current evidence of market failure, where the private sector is unable to fulfil a public need and that failure results in negative externalities”.

“For example, the major tourist coaches do not visit Tauranga because they operate in partnership with branded hotels. If tourism operators cannot guarantee block bookings, they do not visit. This effectively cuts a source of tourists to the city who would also likely visit the public Te Manawataki o Te Papa facilities e.g. museum and exhibition gallery.”

Willis Bond’s study concluded there was a clear opportunity to improve Tauranga’s market share, which was “underperforming relative to its population size”.

Last month, Tourism Bay of Plenty general manager Oscar Nathan said the city was experiencing a “real rebound” in the business events sector after the Covid-19 pandemic. There was now a lot of “pent-up demand” and Tauranga was an “attractive option” due to its proximity to other centres, particularly Auckland.

In Monday’s meeting, council general manager of city development and partnerships Gareth Wallis said the business case followed other investigations and would help to crystalise “whether it’s something the city could, or should, invest in in the future”.

Commission chairwoman Anne Tolley said the business case proposal made “perfect sense”.

Commissioner Shadrach Rolleston said a hotel and conference centre for Tauranga, to tie in with the civic precinct, Te Manawataki o Te Papa first stage, was “really important”.

Tauranga City Council commissioner Shadrach Rolleston. Photo / Alex Cairns

He said it was important they worked together.

“They are complementary and they [will], either separately or collectively, deliver – from an economic perspective and the growth of the city centre,” Rolleston said.

The old TV3 site where there are plans to build a new hotel and conference centre. Photo / Alex Cairns

The commission approved the preparation of the hotel and conference centre business case and noted its findings would be reported to the new council this year.

Any future decisions about the proposal’s progress will likely be subject to a Long-term Plan Amendment.

Work has started on the first stage of the $306.3m civic precinct Te Manawataki o Te Papa which includes a museum, community hub and library, and civic whare,expected to be completed by 2028.

However, the project’s financial analysis has previously been criticised as it was revealed ratepayers could end up paying an extra $26m a year in running costs.

Kiri Gillespie is an assistant news director and a senior journalist for the Bay of Plenty Times and Rotorua Daily Post, specialising in local politics and city issues. She was a finalist for the Voyager Media Awards Regional Journalist of the Year in 2021.