Rottnest resort developer optimistic about ‘paradigm shift’ in spending

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“We see collaboration rather than competition as the way forward and there’s more than enough for everyone,” he said. The Australian Financial Review after being revealed to be the main shareholder of the new station.

Peter Fogarty says there has been a “paradigm shift” in consumer spending since COVID-19.

While Mr Fogarty, whose family business owns an array of hotel brands, including Evans & Tate, agreed that controlling costs in a time of high inflation should be a priority, he said carrying out the project when tourism to WA was low reflected his long-term confidence.

After recent trips to eastern states, he added that ‘everyone is joking that we’re from the state no one is allowed to visit’, despite the easing of the tough border policy the 3 of March.

“I don’t think people are coming back here,” he said, while noting that Rottnest was also loved by locals and often had more demand for accommodation than supply.

“We are almost grateful to build and not operate over the next 12 months.

“There will be more people ready to come and spend money and do things then [next summer]provided there isn’t a dramatic recession and I think…Australia probably won’t see that, but other parts of the world will, so we want to be able to take advantage of that.

The redesign of the Rottnest Lodge began in May 2021 when the WA Government unveiled a development consortium led by Place Development Australia as the winner of the at least 25 year lease. Mr Fogarty’s Pendulum Capital provided equity, brought in other WA investors – including the Atzemis family’s GPA investment vehicle – and arranged the debt. Social Grounds Hospitality will operate the hotel and restaurants.

The development will feature 109 bedrooms, a swimming pool, bar and restaurant.

Mr Fogarty said that despite rising wages and material costs, the main inflationary pressures hitting his other businesses were soaring transport costs, which the Rottnest project could largely avoid, giving him the confidence to hit his budget of $40 million set a year ago.

The rise in inflation that swept through the economy was “artificial”, largely caused by COVID-19, and would start to subside in the coming years.

For the hospitality sector, an offsetting positive effect has been rising prices and strong demand after two years of additional savings and lockdowns.

“People are spending money again and all the prices have gone up dramatically and no customers are complaining,” he said of the industry. “Food is up 20-30%, wine 100% in restaurants, so it’s almost like a paradigm shift in terms of pricing to be able to go out and have a good time, and I think that’s here to be honest.

“So we actually think the timing is pretty good. Yes we have to keep costs under control but we are really excited about the opportunity and the good thing about Rottnest is everyone comes to Rotto it’s a leveller it’s not a place class reserved for the rich or the poor.

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