Diversified investment pan-African investment group Lonrho Plc has been awarded the redevelopment and subsequent management contract for the 250-room Karavia Hotel in Lubumbashi by the government of the Democratic Republic Of Congo (DRC), it said on Wednesday.

The tender process was run by the Comite de Pilotage de la Reforme des Entreprise Publiques, (COPIREP), the government department for reconstruction projects and the Lonrho proposal was approved by the Council of Ministers.

A new company, Karavia 2008, will be established to be 30% owned by the government of the DRC, 35% by Lonrho and 35% by De Moerloose Group, a large Belgian group operating in the DRC in the automotive, distribution and airlines business.

Karavia 2008 will hold a 25-year lease on the property for a peppercorn (nominal) rent, renewable for a further period of 25 years. Karavia 2008 will invest up to US$20 million in the refurbishment project to bring the hotel back to an international five-star standard.

The funds will be raised as a combination of equity and debt finance. The Karavia hotel is currently the only potential large-scale accommodation facility in Lubumbashi, the burgeoning centre of the copper and cobalt industry in the DRC.

The hotel, originally a Sheraton Hotel, has been derelict for over ten years and requires a complete refurbishment.

The hotel market in Lubumbashi is currently chronically under-serviced as there are no international standard accommodation facilities meeting the growing market demand, being driven by executives and mining engineers developing the world-class natural resource projects in the region, such as Phelps Dodge, Anvil, Nikanor and First Quantum, the company noted.

In excess of US$12 billion is being invested in natural resource projects in Katanga province, of which Lubumbashi is the capital.

Lonrho Hotels will have the management contract for the hotel on a renewable ten-year management contract. The hotel will be branded the `Karavia: A Lonrho Luxury Hotel'.

It is estimated that the project will take approximately twelve months to complete.

"Lubumbashi is experiencing significant economic growth as new copper and cobalt projects are planned and come on line.

"This in turn has generated large numbers of expatriate and Congolese visitors, who currently have very limited choices for accommodation," said David Lenigas, executive chairman of Lonrho.

He added that the requirement for an international standard hotel to cater for that market was clear, and forecast occupancy and room rates were excellent.

Source: I-Net Bridge