High building prices delay Karratha’s Hilton hotel build

A Pilbara construction boom has left the developers of Karratha’s multimillion-dollar Hilton Hotel struggling to find a builder within budget, but those backing the project say they are as committed to realising the build as ever. Last week the Pilbara News reported works were yet to begin on the $20 million hotel despite project developer Pacifica previously announcing it was in final talks with a builder and construction would begin in February. It is the latest in a series of setbacks to hit the project, which includes a $10m commitment from the City of Karratha, after it was delayed twice last year as COVID-19 hit supply chains. The four-star hotel, to be built at The Quarter, will consist of three levels and 100 rooms to attract a wider tourism demographic to Karratha. Its design phase also dragged on for months, with the company not finishing the final details until the end of 2019, almost a year after the initial target date. Pacifica Developments project manager John Zendler said the company was finalising talks with builders for the hotel. “It’s a bit of a struggle at the moment, (we are) getting a few builders to the table but getting any builders — mostly preferred builders — to commit to a price that works in terms of the budget is a bit of an issue at the moment,” he said. Mr Zendler said the COVID building boom had caused subcontractor prices to increase above their budget restraints. “It is one of those things that if we threw a lot more money at it, that would probably make some of that go away — but we don’t have the budget to do that,” he said. “We’ve got the project funded, it’s capitalised ready to go, but any project can only bear so much cost. “Because of what subcontractors are wanting to be paid in the Pilbara at present, it has caused it to push beyond the minimum hurdle rate of what we would expect for return on investment.” He said the company was still committed to delivering the hotel and hoping to get on-site within the next couple of months. “The project is funded, Hilton are still keen to do the project, so all in all the right ingredients are there, bar a construction price that works at the moment,” he said. Mr Zendler said the company had two other Hilton projects, in Kalgoorlie-Boulder and Busselton, that had started construction. “We’re not facing the same problem in Busselton and in Kalgoorlie, but in Karratha the builders are finding it hard to get trades,” he said. Last month, Karratha Mayor Peter Long told the Pilbara News the developer was making progress on the project and remained committed to delivery of the hotel. “Like many in the community, we are disappointed that construction of this project is yet to start but we do understand that increasing building costs, increasing labour costs, COVID impacts and difficult commercial finance markets in the Pilbara make this a complex project to get off the ground,” he said. The hotel was granted planning approval by the Kimberley Pilbara Gascoyne Joint Development Assessment Panel in September 2019 with 13 conditions. The approval was valid for two years and will lapse if it has not substantially begun in that time. Pacifica’s Hilton hotel build in Kalgoorlie-Boulder has been hit by years of setbacks, while its $25m Busselton Hilton is now earmarked for a 2022 opening. An Albany hotel was announced in late 2020 and plans for a Kununurra golf course hotel were aired last year.