Plenty of potential for things to go wrong Snoopy. The initial capex projection for the Gondola was $60m quickly revised two months later to $100m without any explanation..yes that's not a typo, the estimated cost in 2016 went up 67% in two months without a word. We all know constructions costs have ballooned badly since then, (what other plausible explanation is there for FBU losing close to ~ $200m on a the ~ $400m fixed price construction of the convention center ?) Factor into the recent environment court ruling that they must supply a multi level carpark to meet the extra demand for car parking caused by the expansion, I could not find a car park for love nor money when down there twice in the last 12 months) and its fair to say that I would pay good money to be a fly on the wall when the directors get their quotes for the construction of this revamp. Won't surprise me in the slightest to see the final cost well north of $200m when its finally completed...and then there's the disruption to this key business during the very lengthy redevelopment process.
I can't help wondering if a far more modest expansion would have been more appropriate and stick the price northwards quite a LOT to dampen down rampant demand.
A superb buffet lunch and gondola ride is $65 is very cheap for what you get in my opinion, (considering other Queenstown pricing for tourism activities).
By comparison a far more modest buffet lunch and trip on the Earnslaw across to the Walter Peak farm is $105, still a very good experience and one I would highly recommend even at that price. I would think Skyline could match that $105 price and few if any tourists would bat a single eyelid.
Skyline gondola ride and buffet lunch $65 https://www.bookme.co.nz/things-to-d...restaurant/984
Earnslaw Walter peak cruise and buffet lunch $105 https://www.realjourneys.co.nz/en/ex...met-bbq-lunch/
My conclusion is there is plenty of risk in the business in the near future and the shares are priced as though everything is going to work out just fine and dandy...but what if it doesn't ?
Not listing on the NZX and pricing disparities like the one illustrated above make me wonder how commercial the directors really are ?
Old boys club who are very wealthy and don't need to make much more money ?
Tell you what Snoops, that Real Journeys is a company going places with a brilliant moat. If they were to ever list at a reasonable PE I'd be very keen to put a paw or three up for some
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