CAPE TOWN Southern Sun Hotels beat off competition from a number of local and international hotel groups to win a 10-year management contract to operate the R100m luxury Pezula Resort Hotel near Knysna.

An announcement in May this year that the contract had been awarded to Protea Hotels to operate under its African Pride Hotels and Lodges brand was "premature", Pezula chairman Keith Stewart said on Friday after the announcement that Southern Sun had won the contract.

"It was never granted to Protea Hotels and between Protea and ourselves we decided it was not a product that would have fitted into their organisation."

This hotel will be the second in Southern Sun's recently launched luxury brand, the Southern Sun Collection, and it will be the flagship of the brand. The first hotel in the collection is The Winelands Hotel and Wellness Centre in Franschhoek, opened earlier this year.

The Pezula Resort Hotel, which will be completed in December 2004, will have 80 suites and a presidential unit. It will also include a spa, indoor and outdoor pools. The hotel's staff will be handpicked to ensure service is on a par with the best in the world, Southern Sun MD Helder Pereira said.

Sixty of the suites will be sold on sectional title, and owners will receive 25% of the income received from the pool of suites. Southern Sun will also own some sectional title units for which it will receive the same rental income as other owners, but it can sell these units at any time as these are separate from the management contract.

The Pezula Resort Hotel is part of a development on the eastern heads of Knysna that includes a residential estate called the Pezula Private Estate, and the Pezula Championship Golf Course.

The golf and residential development on the site has been controversial since its inception by Italian-Thai investors six years ago. The latest controversy has arisen over fears that the residential estate plans to draw water from the nearby Noetzie River.

A spokesman for Pezula said the estate had filed an application to the local municipality to draw water from the river to irrigate the indigenous vegetation that will replace the commercial pine forest and blue gums removed to make way for the development. The water is not intended for human use. But it is for the municipality to decide on the application, and even if it is unsuccessful, it will not jeopardise the residential development.

Nov 03 2003 06:48:57:000AM Charlotte Mathews Business Day 1st Edition