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Posted On Thursday, 04 September 2003 02:00 Published by
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Greenfields hotel projects of some R1 billion in progress, plus major spin-offs for neighbouring African countries

Greenfields hotel projects of some R1 billion in progress, plus major spin-offs for neighbouring African countries

Apart from being one of the few countries in the world that continues to enjoy strong growth in Revpar (revenue per available room), the South African hospitality and leisure industry is receiving considerable global attention from investors right around the world - ranging from smaller investments of around R3-R6 million up to major greenfields projects in excess of R300 million, says Joop Demes, MD of Golding Hotel Investment Consultants (Pty) Ltd (GHIC), a member of the Pam Golding Property group.

"Having some two years ago predicted South Africa's emergence as a prime investment opportunity for both overseas and local leaders in the hospitality and leisure industry, it's extremely gratifying to see that we are in this regard now widely noted across the globe and attracting such a broad variety of investors, and across all areas of the market," says Demes.

"In the Cape we have in the first seven months of 2003 already seen in increase in Revpar of approximately 20 percent when compared with the same period the previous year. The trend towards growth in tourism continues with our capacity to increase tourism figures and decrease seasonality further boosted through additional flights direct from Dublin and London, and the opening of Cape Town's new convention centre."

However, Demes adds a word of caution saying that the strong rand coupled with normal inflationary increases have seen effective prices rise by as much as 40-50 percent over the past 12 months. He says while South Africa still offers value for money in terms of accommodation - and even more so with regard to food and beverage prices - care must be taken to ensure we don't lose our competitive edge in regard to accommodation establishments.

He says in regard to smaller investments priced from around R3-R6 million, which are extremely affordable particularly to the overseas market, over the past 12 months GHIC has been involved in a number of transactions. These

include: the 25-room Mount Sheba Hotel in Mpumalanga sold to an American investor, the 28 room Protea Hotel Benoni Lake in Gauteng purchased by a Cypress buyer, the only small luxury hotel in the CBD of Cape Town - the 15-room Cape Heritage Hotel sold to a UK investor, the 16 room Redbourne Lodge on the Garden Route sold to a German investor; and GHIC is about to finalise a transaction for a 16 room country hotel in the Cape Winelands with a consortium of investors led out of Lebanon.

Says Demes: "The diverse locations of these properties around South Africa, combined with the spread of investors from numerous countries right around the globe, is indicative of the significantly increased awareness of the variety and attractiveness of investment options available in the SA market. Just three to four years ago we would typically have seen mostly foreign investors originating mainly in the UK and Germany."

He says transactions at the top end of the market have also picked up considerably, involving consortiums as well as a number of leading regional and global hotel operators who wish to either establish or increase their presence in South Africa.

"Among transactions we are busy with are those for the acquisition of approximately 150 rooms in Cape Town for a UK investor, and accommodation pertaining to five or six hotels spread across the country and representing a total investment of R320 million - for a German/Dutch/UK consortium," he says.

In addition, GHIC is involved in facilitating and providing technical assistance in a number of greenfields projects around the country, another growing trend which will provide a major boost for the economy as well as employment and skills training.

Says Demes: "There is a flurry of activity in regard to greenfields hotel projects, and we are currently busy with numerous developments which represent a total capital investment of approximately R1billion. These are the development of a new airport hotel in Johannesburg, a 140 room hotel in Cape Town's CBD, a 145 room hotel in Green Point, a 300 room hotel on the V&A Waterfront which will cater for international travellers at the very top end of the market, and a new 80 room development in Knysna on the Garden Route."

More good news is that South Africa's success in attracting major investment in the hospitality and leisure industry is having positive spin-offs for neighbouring countries in Africa.

"Many foreign operators attracted to South Africa and wishing to further expand their portfolios are now looking at surrounding countries, and we are currently involved in a variety of projects including a new and sizeable game lodge development in Namibia, and an exciting acquisition in East Africa - a region which has been relying on South Africa to help accelerate growth in its tourism industry.

"There are other investors poised to invest in the accommodation industry in Zimbabwe and tremendous interest in Zambia, Mauritius and Angola," adds Demes.


Issued by Gaye de Villiers

Tel: 021 6837788 or 083 325 1939

On behalf of Golding Hotel Investment Consultants

Publisher: Golding Hotel Investment Consultants
Source: Gaye De Villiers
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