Monday , July 23 2018

Famous brothel brothers branching into hotels

Millionaire property magnates the Chow brothers are buying up office blocks throughout New Zealand to convert into hotels.

John and Michael Chow have just bought Palmerston North’s former FMG building to turn into a four-star hotel.

The Chows, who are expected to remain on next month’s National Business Review rich list, are best-known for their brothels and strip clubs but have diversified into house building, finance, and commercial property – most recently, investing in a string of hotel developments.

The brothers saw an opportunity in New Zealand’s “severe shortage” of hotel accommodation and a tourism industry boom, Michael Chow said.

John Chow and his brother Michael have built an empire encompassing finance, housing, hotels and brothels from the seed of a family takeaway shop.

The Chows have an unconditional contract on the old FMG building, and plan to convert the 12-storey building into a 100-room, high-quality hotel, Michael Chow said.

The hotel would also include a restaurant, conference rooms, a gym and a rooftop bar with views of Mount Ruapehu and Taranaki.

Palmerston North was the first city the Chows lived in when they migrated from Hong Kong in 1984.

“I have happy childhood memories of Palmy and we are excited to finally come back and support the city that supported our family.”

The Palmerston North investment comes as the Chows continue to work on hotel developments in Wellington and Rotorua.

The Chow Group is already on the hunt for a suitable international hotel operator.

“With our Oaks build in Wellington and our Pullman build in Rotorua, we already have strong business relationships with two top international operators and we have operated hotels ourselves so we know the market well now.

“When we did the numbers on Palmy, literally on the back of an envelope in [Café Express] across the road, we knew we could make it work without even talking to our external advisers.”

The Chow brothers started their hotel empire with the Trinity Hotel in Wellington before constructing and operating their Park Ave hotel in Auckland.

Both the Oaks Wellington and the Pullman Rotorua are due to open mid 2019.

The Chows have amassed assets of more than $500 million in Christchurch, Wellington, Rotorua and Auckland, but this is their first known investment into Palmerston North.

Palmerston North mayor Grant Smith said the new hotel was “fantastic news” and would bring great benefits for both the brothers and the city.

“It’s an exceptionally good buy. It’s right in the middle of our city and it’s an iconic building… It’s great the Chows have seen an opportunity here.”

Smith said with the city’s booming conference and seminar sector, the city could do with another 4- to 5-star hotel to meet demand.

“To give an idea how much it’s grown –  I’ve opened more conferences in the last nine months than I had in [the rest of the] past three years.”

Central Economic Development Agency conventions and events executive Phil Hildred​ said the sector brought significant economic benefit to the regional economy.

A single 400-delegate conference had an estimated $400,000 economic benefit to the region over three days, he said.

And agency analysis found the city’s conference industry, including annual meetings and training seminars, was worth more than $86m annually to the local economy.

So, both the agency and the local councils have been working to attract more and larger conferences to the city, Hildred said.

“[But] we are limited on which conferences we can target due to the number of corporate accommodation rooms the city has available.”

A new hotel, with top-end conference facilities, would be a very welcome development, he said.

About Paul Mitchell and Chloe Winter

Paul Mitchell and Chloe Winter write for the Sunday Star-Times

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