Premier criticises hotel decision

Press, 22 January 1982, Page 1

Premier criticises hotel decision

PA Wellington The Premier of the Cook Islands (Sir Thomas Davis) has criticised the Tourist Hotel Corporation and Air New Zealand for deciding to close the luxury Rarotongan Hotel.

The T.H.C. management had not listened to cost cutting ideas, while Air New Zealand had sharply cut services in the middle of an advertising campaign, he said from Honolulu.

In Rarotonga the Cook Islands' Minister of Tourism (Mr laveta Short) said Air New Zealand's decision to replace DCIO services with a Boeing 737 service via Tonga and Fiji had been the hotel's deathknell.

"I don’t think we have had a fair deal from Air New Zealand." Mr Short said. "Any other airline would have given the place a promotion. I recognise Air New Zealand have problems, but they certainly didn't try to help us.” It is believed that a 59 page report prepared by the New Zealand Auditor-Gen-eral on the hotel said that while management was "efficient and effective.” urgent

attention needed to be given to its profitability. It is believed that one implication of the report was that the hotel's losses were so big that had the directors traded beyond this financial year'they would have been 'criminally liable. Losses were so big-that bills could not be paid. ’ ■ - '■ Air New Zealand's chairman. Mr R. A. Owens said yesterday that the airline wanted to sell its shares. He said the Rarotongan. worth $7.5 million was a "known disaster."

The general manager of the T.H.C. and managing director of Cook Islands Hotels. Mr Michael Hoy. said that if the hotel closed 100 people would lose their jobs.

tn the wings — and keeping vague about its South Pacific intentions — is the aggressive and profitable Australian company, Ansett Transport. Ltd. Sir Thomas said Ansett, which last week took over the management of Samoa’s Polynesian Airlines, had talked to his Government about air services and hotels in general terms.

He said that while the T.H.C. had complained of the energy costs in running the hotel,'it had ignored his plan to cut energy bills between a half and twb-thirds. Mr Hoy. who would not comment directly on that assertion, said the Government had set an electricity price of 38c a unit and the hotel was paying $500,000 a year. Hotel economics had also been affected by a 5 per cent turnover tax on all transactions.

The Minister of Tourism (Mr Talbot) said from Ashburton that because losses on the hotel were about $1 million this year there was no wav the New Zealand Government could see it continuing in its present form. Earlier report, Page 7.