TRAFFICKING IN HOTELS

Chronicle (Levin), 14 May 1946, Page 2

TRAFFICKING IN HOTELS

-Press Association

Bv Telearavh—

DUNEDIN,' May .11. . Iu a reserved judgment issued yester-;. day, tlie Otago Land Saies ConVluittee refused permission for ti) e transferiot the Criteriou Club Ilotel at Alexandra from Cliarles George Alouutney to AVis Lancaster Young at tlie contract; price of £17^000, of which sum goodwill was sliown at £10,000. Mouutney bought tlie hotel ou November 12, 1943, for £11,000, and the present price. involv'od an increase in goodwill of £5(500 ip a period of just over two years. . "This sale, the judgment said, Cis only one' of a streaui of saies of holels. for the second time witliin a short period which has lately been coiiiiirg before us. " Jn the lirst rouhd of saies, the applicauts supported the goodwill liguros l>y a variety of methods, such as avorage takiugs or net proiits, ou a reutal or iuvestmeut basis, or by coniparison Avith other hotels. "Goodwill being an intangible itcm and its value depending considerably on opinion, the committee could liot over a short period and in the case of first saies of various holels, .dctect aecurately the increase that was gradually taking place' but now that the Act has been in operation for a longer period and now that a series of second saies has provided a more aecurate measuring rod, avc can see that tliere has been a very large increase in liotei goodwills. "This has iuduced an o rgv of speculation or traflicking in hotels which we feel is contrary to the provision of the Act. "If avc had been prepared to approve the sale," tlie judgment added, "avc Avould have allowed an increase of tlie .1943 price by the sum of £400 for tangible improvements Avhlch the vendor has carried out to the property, but avc would certainly not ha\'e been justi (ied in alloAvance of the large increase asked for on the goodwill. "