OFF­SHORE HO­TEL IN­VESTORS EYE SA

Finweek English Edition - - Property - JOAN MULLER

IN­VESTORS AND OP­ER­A­TORS in the ho­tel in­dus­try have seen a marked in­crease in oc­cu­pan­cies and in­come in 2006 (see ta­ble), no doubt prompt­ing more de­vel­op­ers and op­er­a­tors over­seas to set their sights on South Africa.

Aus­tralia’s Stella Group re­cently an­nounced the ac­qui­si­tion of SA-based ho­tel op­er­a­tor Protea Ho­tels for R1,48bn, while an­other off­shore ho­tel group is ru­moured to have tar­geted JSE-listed City Lodge Ho­tels for a buy­out.

Both come on the back of a healthy in­crease in ho­tel oc­cu­pan­cies, room rates and rev­enue per room (RevPAR). Latest fig­ures from the HotelBench­mark Sur­vey by Deloitte show that av­er­age oc­cu­pan­cies for five-star ho­tels jumped nearly 7% to 70% in De­cem­ber 2006, the high­est level in many years. Ris­ing oc­cu­pan­cies and room rates mean that off­shore play­ers can earn bet­ter re­turns on their ho­tel in­vest­ments than was the case a few years ago, when SA was still strug­gling with an over­sup­ply of ho­tel rooms.

Wendy Smith, di­rec­tor of Deloitte’s tourism, hos­pi­tal­ity and leisure di­vi­sion, says over the past year there’s been a sig­nif­i­cant in­crease in en­quiries from in­ter­na­tional groups in­ter­ested in de­vel­op­ing new ho­tels in SA.

The big­gest chal­lenge, says Smith, is to find suit­able sites for any pro­posed new de­vel­op­ments in pop­u­lar ar­eas such as Cape Town and Sand­ton, north of Jo­han­nes­burg. “Ma­jor in­ter­na­tional ho­tel brands want to be in the right lo­ca­tion and there are lim­ited prime spots still avail­able.”

HO­TEL OC­CU­PAN­CIES & IN­COME ON THE RISE (DEC 2006)

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