Luxury lodge operators James and Hayley Baillie have all but shelved plans to open a 10-suite hotel in Sydney, blaming Australia's inflated building costs and red tape for their reluctant decision. After three years of hard work and "a not insignificant investment", James Baillie says tender costs came in 50 per cent over budget, forcing them to relinquish their dream of opening Baillie Sydney. Architects Tonkin Zulaikha Greer were charged with transforming a 19th-century row in The Rocks into the élite, all-suite property. The Baillies still have ample challenges to occupy them. Besides running Capella Lodge on Lord Howe Island and Southern Ocean Lodge at Kangaroo Island, they're busy lifting the bar at Longitude 131, the Uluru desert camp they took over in November. James says the couple are still working actively with the Sydney Harbour Foreshore Authority on other options and are "passionate" about developing a Sydney hotel.