SA’s hotels attract investors

18 June 2007

With South Africa’s tourism industry registering healthy growth and the 2010 Fifa World Cup still to come, it’s little wonder that local hospitality groups are attracting increasing attention from foreign investors.

In the latest of a string of investments in the local industry, Leisurecorp has announced the purchase of the 170-hectare Pearl Valley Signature Golf Estate & Spa development in the Western Cape for an undisclosed amount.

Leisurecorp is a division of Istithmar, the investment arm of Dubai World, and a partner in the consortium that bought out one of Africa’s prime properties, the Victoria & Alfred Waterfront in Cape Town, in September last year.

‘Huge potential’
Leisurecorp chief executive David Spencer told Business Report this week that the course designed by golfing great Jack Nicklaus would host the SA Open Championship later in the year and was regarded as one of the best in the country, with “huge potential” for further development.

In May, Belgium-based Rezidor Hotel Group announced that it would open a hotel in Sandton, north of Johannesburg, in late 2008, featuring 256 rooms and 27 suites.

The Radisson Sandton will be located in the heart of South Africa’s financial centre, in close proximity to the JSE, Sandton Convention Centre and Sandton City shopping mall and within easy distance of OR Tambo International Airport.

“South Africa is an upcoming destination for business and leisure travellers,” Rezidor CEO Kurt Ritter said in a statement.

“The government has prioritised tourism as a key economic sector, and international arrivals increase continuously – we are expecting new heights in 2010 when the country hosts the Fifa World Cup,” Ritter added.

Four new Express by Holiday Inns
Also in May, UK-based InterContinental Hotel Group announced that they had entered into partnership with Cape Town-based ISO Leisure to develop four new Express by Holiday Inn hotels in South Africa.

The four hotels will be situated in Cape Town, Johannesburg, Pretoria and Umhlanga outside Durban, and will be built between 2007 and 2009.

InterContinental’s announcement was “indicative of our confidence in the country’s economic prospects and stability,” said InterContinental vice-president for Africa development, Ewan Cameron.

In March, Australia-based Stella Group purchased Africa’s biggest hotel chain, Protea Hotels, from local private investors for Aus$255-million (about R1.48-billion).

The acquisition gives the Stella Group access to more than 9 000 rooms in 126 hotels in 13 countries around Africa. Another 3 000 rooms will be added to Protea Hotels by the end of 2008/09.

“As the leading independent hotel management group in Africa, Protea Hotels is an excellent acquisition for Stella Group, rounding out an important geographic region in the company’s international profile,” said Stella Group MD Rolf Krecklenberg.

Up to eight new luxury hotels
Also in March, Germany’s Arabella Hotel Holdings International and US-based Starwood Hotels & Resorts Worldwide announced plans to build as many as eight luxury hotels in South Africa, with at least two expected to be operational in time for the 2010 World Cup.

However, by far the largest foreign investment in SA’s hospitality industry to date occurred in September 2006, when Istithmar partnered with UK-based London and Regional Properties to buy the iconic Victoria & Alfred Waterfront in Cape Town for US$1-billion.

The deal includes an additional $1-billion investment in further development of the Waterfront, including increasing the number of hotels there.

Prior to that, in March 2006, Kuwait-based IFA Hotels & Resorts (IFAHR) listed two South African subsidiaries on the JSE. IFAHR South Africa owns Zimbali Lodge on KwaZulu-Natal’s north coast, and a 50% stake in the multi-million rand Zimbali Coastal Resort, which combines hotels, golf courses and luxury residences and leisure facilities.

A 300-hectare extension to the resort, Zimbali Lakes, is due to be substantially complete in time for the 2010 Football World Cup.

Record-breaking growth
According to the latest official figures, South Africa’s foreign tourist arrivals grew by 14% in 2006, three times the global tourism growth rate of 4.5%.

Tourism to South Africa has flourished since the fall of apartheid: while only 3-million foreign visitors visited the country in 1994, the number had more than doubled to 6.7-million by 2004, and increased to a record 8.4-million in 2006.

According to the Department of Tourism, tourism’s contribution to the country’s gross domestic product (GDP) grew from 4.6% in 1993 to 8.3% in 2006, and the government is looking to further increase its contribution to 12% of GDP by 2014.

Hosting the Fifa 2010 World Cup, the largest sporting event in the world, will bring in tens of thousands of additional tourists not only to watch the matches, but also to be part of the celebratory atmosphere around the country.

SouthAfrica.info reporter

Using SAinfo material Want to use this article in your publication or on your website?
See: Using SAinfo material