Last Resort

Newcastle Herald

Thursday December 4, 2008

BEN SMEE PORT STEPHENS

EVERY ratepayer in Port Stephens has paid for two nights luxury accommodation at the award-winning Samurai Beach Resort, without ever having stayed there.

Having already pumped more than $9 million into the eco-resort at One Mile Beach, ratepayers now stand to lose another $10,000 a week over the next nine years, sparking a row over the site's future.

Port Stephens Council initially invested $6.65 million in Samurai Beach, the former nudist retreat it purchased in 2001, to buy the leasehold on the site, refurbish what was there and add unit accommodation. But the resort has failed to make a profit since, including losing $628,000 last year.

Financial projections seen by The Herald show that unless the site receives a major additional investment, it will not be profitable for the forseeable future.

If nothing is done, by 2016 the resort will still be losing more than $400,000 annually.

The council's commercial services manager, Jeff Smith, said those forecasts would not eventuate, as the council had no option but to invest more money or sell the resort.

Mr Smith said sale, investment or joint-venture options would be

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Struggling resort could cost ratepayers $10,000 a week

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put to councillors. But that decision has already created divisions among councillors.

Some have called for the council to jettison the underperforming resort and others have vowed not to let the valuable land go for less than it is worth in the current economic climate.

Mayor Bruce MacKenzie said the council should never have bought Samurai Beach Resort, but said it would not take part in a "fire sale".

"Now we've got it, we've got to make the most of it," Cr MacKenzie said.

"Perhaps we've got to bite the bullet and invest more."

Others, like Cr Geoff Dingle, feel the council cannot afford to lose any more money and should cut its losses.

Cr Dingle believes Samurai Beach is one area where council has been wasting money that could be spent on infrastructure.

"It's got insufficient rooms, no conference centre, no liquor licence. It's never going to make a profit," Cr Dingle said.

A consultant's report submitted about a year ago suggested selling the site, but the council stalled because it first wanted to increase the value by extending the lease with the NSW Department of Lands.

Many councillors are thought to favour finding a joint-venture partner. But a suitable partner may be as difficult to find as a buyer in this tough economic climate.

© 2008 Newcastle Herald

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