Air operations lift airport property
A return to profitability from its air-side operations has given Hamilton Airport the opportunity to invest in another stage of its commercial property development.
The Hamilton airport company, Waikato Regional Airport, owns 330ha to the southwest of Hamilton, including its air operations centre.
Along with the burgeoning Hautapu area, the Ruakura inland port and Horotiu, it is one of the fast-growing industrial and commercial areas surrounding Hamilton.
Following a period in the doldrums after the 2007 downturn, the airport company has experienced a lift in demand for its properties.
The airport company’s holdings include central, southern precincts and a 98ha northern precinct.
Airport chief executive Mark Morgan said that aside from one small section, all of stage three in the central precinct had been sold, and the fourth stage was being developed. The company was about to open its southern precinct, of which it had conditionally sold about half of the 9ha area.
‘‘We will ultimately see about a further 20ha in the central and southern precincts and another 20ha of industrial and commercial land in our northern precinct, over the next 10 years.
‘‘While sales are going well, the company is only realising about 10 per cent of its overall holding and is looking to buy land in strategic locations bordering the airport.
‘‘We’re looking to the longterm, especially the expansion of the Southern Links roading network, and how we can protect our commercial and aeronautical businesses. It’s a 50 to 100-year foresight.’’
The thing that has allowed the airport company the ‘‘wriggle room’’ to invest in the future of its property business has been an improvement in earnings from air operations.
‘‘Historically the air business has not been profitable and our property strategy has been essential to provide revenue and profitability.
‘‘This year, for the first time in five years, we have delivered a profit from the air business based on strong passenger growth. The profitability of the air business allows us to take a measured approach to our property strategy.’’
The company recently completed a 10-year plan covering its air, property and tourism activities. Earlier this year it bought the nearby 62-room three-star Hamilton Airport Hotel and Conference Centre with settlement deferred for two years.
‘‘The current operator is a family business. We saw a real shortage of accommodation in the region and we have the opportunity to go from strength to strength with a new golf course being designed at Lochiel and our proximity to the national agricultural Fieldays site at Mystery Creek.
‘‘The current operator has agreement to run the business until January 2020. We are in the process of engaging an operator to run the hotel on our behalf and it will allow us to maximise our synergies with a conference centre at the airport and also in the hotel.’’
But the airport company will have to spend some money, with a multimillion-dollar internal and external refurbishment of the hotel planned over the next 12 months, aimed at bringing it up to four-star standard.
‘‘We will get a better yield from an upgraded hotel and we have the balance sheet to develop it,’’ Morgan said.
A 6000 square metre retail development is also planned for the future on a currently empty space almost between the airport terminal and hotel, serviced by a new main entrance.
The 360,000 passengers and the people who dropped them off and met them were a market that could sustain a retail precinct, he said.