Snow at the now-closed Chateau Tongariro. Photo: RNZ / Danielle Clent
A Department of Conservation (DOC) briefing paper on options for repairing the Tongariro Chateau warns the government it will lose money on any investment it makes such a project.
The August briefing obtained via the Official Information Act says a significant Crown investment would be required to bring the Chateau up to standard for re-leasing.
Actual costs were blacked out wherever they appeared in the heavily redacted document.
Govt investment in Tongariro Chateau will cost - DOC
DOC said it had engaged property agents with expertise in the hotel industry to advise on whether it would be commercially feasible for a private operator to once again run the Chateau as a hotel.
It considered a short-term occupational lease typical of the industry and a long-term lease.
Both options came with significant costs for seismic strengthening - the highest cost - and significant repairs before an investor or operator could take on the business.
"This would cover costs for repairs, refurbishment of some staff accommodation, hotel room and hotel facilities renovation, other related construction and project management costs and contingencies," the paper said.
Under the headline "Return on Crown Investment" the paper said these costs could be partially offset by lease revenue for both options.
"However, under both options, investment in the chateau results in negative net value to the Crown."
It also warned the risk of climate change to ski operations could affect the commercial viability of the chateau.
The briefing recommended not taking an expressions of interest process forward and sought direction from Minister of Conservation Tama Potaka on next steps.
As background, DOC reminded the minister it was costing the department $1.8 million to maintain the abandoned building to a basic level in 2023/2024 and it had budgeted $2.1 million in 2024/2025 for the same purpose.
It had also provided advice on the cost of decommissioning the building.
The briefing did not consider the wider economic benefits for the region of a Crown investment in the chateau or its heritage value to New Zealand.
"However, we know that the hotel previously employed 73 staff at peak operations and accounted for 30 percent hotel room stock in the district," it said.
"The permanent or long-term closure of the chateau alongside uncertainty over the ski fields is likely to negatively impact the local economy."
DOC said it intended to engage with iwi, the local community, Heritage New Zealand, and the Ministry of Culture and Heritage to inform Cabinet on decisions about the long-term future of the building.
The briefing paper signed off by saying if the minister agreed DOC not proceed with the expressions of interest process it would prepare a Cabinet paper by October 2024.
If not, it would proceed and complete the process by September and report back on its outcome in early October.
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