Sure Kamhunga

Companies Editor

Hotel group African Sun is buying two medium-sized hotels in SA for more than R270m.

The purchases are part of an expansion strategy in which it will spend up to R1bn over five years to become one the largest hotel companies in Africa outside SA.

Group CEO Shingi Munyeza said on Friday that the group, which owns Rosebank's Grace Hotel, would take over a five star hotel in Cape Town with 160 rooms once funding arrangements with an international bank had been finalised, and was conducting a due diligence exercise on a 100-bed hotel in Pretoria.

The group, which recently took a 10-year lease of the Lakes Hotel and Conference Centre in Benoni, with 151 rooms, will focus on managing and owning medium-sized hotels in SA targeted mainly at the business traveller and tourists.

Hotel and property companies including Hyprop Investments, Abalengani Group and Rezidor Hotel Group are planning to build hotels to cash in on rising demand for accommodation, particularly for the business market, and to prepare for the expected influx of visitors before and during the 2010 World Cup.

Munyeza said African Sun was scouting for sites in Durban, which he said desperately needed more hotel rooms.

“Rustenburg is another interesting area we are looking at. Our strategy is to be a niche operator in SA and we believe there is tremendous opportunity to grow the business here.

“We have taken over the Lakes Hotel and we are targeting the business as well as the conference and banqueting market. Right now we are busy doing a bit of work so that it meets the expectations of our target market," he said.

African Sun had identified the skills shortage in SA as a major problem and would develop a hospitality training school in the country. The shortage is particularly acute in the middle to senior management levels, hotel experts say.

“We want to be one of the biggest hotel groups in Africa based on our ability to mobilise skills and competencies, hence our decision to establish a hospitality school in SA, which would be similar to a facility we are developing in Equatorial Guinea," Munyeza said.

African Sun is listed on the Zimbabwe Stock Exchange and is seeking a listing in London.

This month it opened a Holiday Inn franchised hotel in Ghana with 166 rooms and is considering an offer to build another 500-room hotel in Ghana. Next month, it will open a top-end hotel and spa boutique in Lagos with room rates of R7700-R8400 a night.

It has also taken over management of a 159-room hotel in Cross River State in Nigeria, a favourite retreat for African leaders. “We want to have at least 5800 rooms in Africa by 2012, with up to 2000 in Nigeria alone. This compares with just 700 rooms in Africa at present, outside Zimbabwe, where we have 1800 rooms."

Munyeza said African Sun would also consider managing hotels in Liberia, Cameroon, Angola and the Democratic Republic of Congo.

“We are building the balance sheet of each country that we operate in, which is important as we want to be able to negotiate for funding in a stronger position. Our expansion in SA, for example, would be to have a good portfolio of properties that are well managed and can generate good returns.”

African Sun had considered a JSE listing. “We think it is better to diversify our market risk,” Munyeza said.

“Listing in the UK will allow us to raise capital in the most cost-efficient manner.” The listing should be completed within three years, depending on the expansion programme, he said.

Source: Business Day