‘One million a room’: Luxury Barossa hotel plan slugged with massive cost hike
Exclusive: Construction costs for a controversial 12-storey Barossa hotel dubbed “The Slug” have nearly doubled, as the wine mogul behind the plan ‘temporarily’ closes a cafe and cellar door.
The construction costs of a 12-storey, 75-room luxury hotel at Seppeltsfield in the Barossa Valley have skyrocketed from the initial $50 million price tag to $85 to $90 million, InDaily can reveal.
Developer and wine industry leader Warren Randall said costs of building The Oscar – colloquially called ‘The Slug’ – is weighing heavily on the proposed project, which has received all planning approvals but is yet to break ground.
The winemaker last month told InDaily he expected to start construction in spring but increased costs meant it would now cost more than $1 million per room to build – “which is a very expensive bill”.
“We’re just working through all of that. At the moment we’ve got council approval for 12 stories high. Can we get more rooms in there to get the capital cost per key down?” he said.
“Do we lose the six-star atmosphere by doing that? We’re going through all those machinations at the moment.
You might like
“And that’s bloody sad because there’s no doubt the Barossa Valley absolutely needs a six-star hotel. Nothing serious has happened in the Barossa for a long, long time. It’s getting a bit stale.”
The revelation comes alongside news that Randall has been forced to close the cellar door at his biodynamic and organic wine label Gemtree in McLaren Vale.
It’s “not closed forever”, he insisted, debunking earlier reports that it is closed permanently, but it will result in about 10 staff losing their jobs, mostly casual staff.
He said it was “virtually impossible” to get drinkers to pay a premium for organic and biodynamic wines.
Stay informed, daily
“Your margins are reduced and then, in an extremely competitive environment, your margins get to a level where it’s unsustainable financially,” he said.
He has also closed the café at Seppelstfield temporarily, noting “there’s been a number of pressures that keep closing regional cellar doors, which is disappointing”.
Last month, Randall called for a mass vine pull across Australia, admitting the industry was going through the “hardest time I’ve seen in my 48 years”.
He said Australia needed to pull out a third of its vines to re-correct and “get back into balance”.
“If we don’t do that, we’ll remain in oversupply,” he said.
“Not Seppeltsfield because the Barossa is secure, as is McLaren Vale, but any vineyards outside that area, I probably need to remove a third of our vineyards.
“We need an industry agreement that we pull a third of our vines out. Trying to get industry agreement with private and public companies for that is extremely difficult, but unless we do, we’ll be in oversupply for a long time.
“It’s a very difficult time. It’s the hardest time I’ve seen in my 48 years.”
Want to see more stories from InDaily SA in your Google search results?
- Click here to set InDaily SA as a preferred source.
- Tick the box next to "InDaily SA". That's it.
