Te Aroha Spa
Back in 2017 we received funding from the Provincial Growth Fund to investigate Te Aroha’s tourism potential.
The study showed that Te Aroha is well located and has a range of natural, historical and cultural assets with significant tourism potential. The business case stacked up for developing a new spa facility in the Te Aroha Domain, and there was widespread support from sectors of the community, including Mana Whenua during community engagement.
We put forward a proposal to the Provincial Growth Fund for government to invest in the development of this spa, however, unfortunately the application didn’t make the cut due to the number of applications received.
What's in the draft budget – work towards developing a new destination spa
Even without the government funding, we think we have an exciting opportunity to develop a new day spa, using the geothermal water in the Te Aroha Domain.
A lot of background work has already been done, suggesting that this proposal would have major benefits for the whole district, creating up to 65 jobs and acting as a catalyst for developments and business growth. (Read more on how the community benefits.)
Our research indicates there is growing demand for high quality spa and wellness experiences, from both domestic and international travel, we still think there is a good business case for this development.
What will it cost?
The development of the spa is estimated to be up to $18 million. However, given the current economic uncertainty, we are proposing to stage the work. Initially we’ve budgeted to spend $5.3 million between 2022/23 - 2023/24 to get us started. A revamped facility has the potential to draw in more customers than it has historically.
Due to capacity constraints with the current facility, there appears to be significant demand that is not being met and therefore potential customers are being turned away. The first step will be to develop a comprehensive plan that will allow us to progress the development in a cost effective way so that as stages are completed and up and running, they are paying for themselves as soon as possible. To ensure that is the case, the development of the plan will undergo the rigour expected of a commercial development.
Over time as demand increases the spa complex could be added onto with more spas and treatment rooms and the domain further developed. Once the detailed planning is complete (which we expect by the end of 2021), we will consult further with the community on this exciting development, with hopes of starting construction in 2022. At this stage the exact nature, location, shape, size and scale of any new day spa and hot pools facility has not been decided.
We already know we can operate a spa at a profit (based on the Te Aroha Mineral Spas), and the business case supports this. We would continue to operate our existing spas until the new facility opened. Ratepayers would initially need to contribute to the costs of the loan while the spa is built, but we expect the income from the spa to cover the costs in the long term. We won’t know the ongoing impact on rates until detailed planning is complete, but we believe the spa will be self-funding in the long term.
| Rates Impact | 22/23 | 23/24 |
| $550,000 urban property | $0.91 | $3.48 |
| $8 million rural property | $13.24 | $50.59 |
| Debt impact - increase by $5.3 million by 2023/24 including inflation | ||
Another option - don’t do it
We could opt not to proceed with this development or delay it given the current economic climate. We would continue to operate our existing spas, which does already attract tourists to the area, but would not achieve the full potential and district-wide benefits that have been identified by the spa business case.
What would this option cost?
Not proceeding at this stage would have no cost. It is likely however that the existing spa facilities would need refurbishment at some point in the near future.
Another option - If you’re going to do it, do it properly
Instead of staging the development, we could commit to the full $18 million development up front. This would make the new facility more impressive from the outset, and would mean the benefits (e.g. job opportunities, business growth in the district) come sooner but would cost more.
What would this option cost?
This would cost $18 million and start impacting rates from 2022/23 (when construction would begin). The current business case indicates the complex would then be self-funding by 2028.
| Rates Impact average per year | 2022/23-2026/27 |
| $550,000 urban property | $32.39 |
| $8 million rural property | $471.06 |
| Debt impact - increase of $18.9 million by 2023/24 including inflation | |
Turning Te Aroha into a health and wellness hub will take more than just a shiny new day spa – we also need to invest in the surrounding area to make sure it’s in tip-top shape and can support more visitors.
So we’re also proposing:
- $500,000 in 2023/24 for improvements to Swim Zone Te Aroha.
- $750,000 from 2021/22 to 2025/26 for improvements to the Te Aroha Domain.
