Historic Phoenix Hotel up for sale
Having bought the iconic Phoenix Hotel in Port Elizabeth when he was just 20, placing it on the market 56 years later was not an easy decision for owner Warwick Ofsowitz to make.
For more than five decades he had poured his heart and soul into the popular establishment, filling it to the brim with carefully selected memorabilia from his trips abroad.
And while it may have survived the changes in the economy over the decades, Ofsowitz believes that there is just no coming back from the crippling financial effects of the Covid-19 pandemic and the forced nationwide lockdown.
He said yesterday while the decision to sell the hotel pained him, his options were limited.
The hotel in Central, which also contains the popular Stage Door restaurant, was listed for sale at R7m this week.
Ofsowitz, who is now in the US, said he had asked a close friend, Naomi Solomons, of Solomons Crafford Properties, to manage the sale.
“I called her up and said ‘just do it, place it on the market’,” Ofsowitch, 76, said.
“I am unable to return home [to SA] so I need to explore all options available to me.
“If it sells, great. If it doesn’t, then I will just have to try to figure something else out.”
The Phoenix Hotel opened its doors in 1837 and was the first hotel in Market Square, and later in Chapel Street, making it the oldest operating hotel in the city.
When level 3 of the lockdown was announced, with restaurants then permitted to open for takeaways, Ofsowitz said the Stage Door began running at a loss.
Some days they would only receive one order for a takeaway and keeping the doors open was simply not feasible.
Ofsowitz said that while restaurants could serve sitdown meals from today, he doubted they would make much money without being able to sell alcohol.
Similarly, with the hotel section, leisure stays were not yet permitted.
Ofsowitz said despite having paid insurance premiums for the past 50-plus years, insurance agencies had not come to the party.
He hoped that the hospitality industry would emerge victorious in a precedent-setting case which will only be heard in the Western Cape High Court in September.
The matter was brought by two Santam clients who want to force the insurance firm to pay Covid-19-related claims for their hotels and restaurants.
In addition to this, Ofsowitz said the municipal bills had not eased up.
“I can’t get back to SA and I am having to do everything via remote control.
“I just don’t see a future for us as things stand,” he said.
“My one blessing is that I do not have a bond to pay.”
The 1,192m² hotel has 11 rooms.
‘I just don’t see a future for us as things stand’
Warwick Ofsowitz
PHOENIX HOTEL OWNER
Court action is looming against short-term insurers that have refused to pay policyholders for Covid-19-related damages under their business interruption policies.
Specialist public loss adjustment firm Insurance Claims Africa, which is representing more than 500 claimants in the tourism and hospitality sector with claims of between R3.5bn and R4bn, plans to bring an urgent application against underwriting agency HIC by next week.
Before Covid-19, the tourism industry contributed 8.6% to GDP and was responsible for about 1.5-million direct and indirect jobs but it expects to significantly shrink in size due to the pandemic.
Insurance Claims Africa is also hoping to join a separate action against Santam, which is due to be heard in the Cape Town high court in September, and is keen to collaborate with firms of attorneys that are representing more than100 claimants with a view to a possible class action. It is engaging with the Financial Services Conduct Authority, the market conduct regulator for the financial services industry, in a bid to find a solution.
Insurance Claims Africa CEO Ryan Woolley told a media briefing on Wednesday that Santam had indicated that it wanted legal certainty in the interpretation of the disputed policies and that it did not want to delay the matter.
A solution was urgent, he stressed, because businesses were threatened with imminent closure.
The insurance companies that face potential legal action include Santam, Hollard, Bryte, HIC and Monitor — both in the Guardrisk stable — Thatch Risk Acceptances, Old Mutual Insure and Old Mutual s One Insure.
Woolley said’the claimants understood that the claims had the potential to devastate the insurers if paid at full value and were willing to reduce them to about 50% or 60% and to agree to terms of repayment over several months, or even years.
He said the insurers should settle the claims of the policyholders and take the fight up with their foreign reinsurers, which he believed were holding the insurers to ransom.
The outcome of a similar case in the UK could be decisive in the way reinsurers and insurers responded to the claims, he said.
Woolley said the claims were being made under a tourism/hospitality policy that included interruption by infectious or contagious notifiable disease.
Short-term insurers have rejected the claims for business interruption on the grounds that the interruption and subsequent losses incurred were caused by the Covid-19 lockdown regulations imposed by the government and not the pandemic itself.
Woolley said the grounds for the rejection of the claims did not make any sense because the insurers chose to insure against a notifiable disease and should have contemplated government intervention and restrictions.
Without Covid-19, there would be no lockdown.
Santam has insisted that its contingent business interruption policies do not cover pandemics.
“The reality is that no insurer can afford to offer widespread pandemic coverage within its standard policies.
“The premiums would be too high and it would become unaffordable for the majority of businesses,” it said in a recent statement.
It said the protection provided by contingent business interruption policies was specific and covered only businesses that were directly affected as a result of the outbreak of a disease at a local level.
Tourism Business Council of SA CEO Tshifhiwa Tshivhengwa estimated that the sector had lost about R72bn since the start of the lockdown and appealed for a relaxation of the shutdown regulations to allow interprovincial travel.
It was only recently that level 3 regulations were relaxed to allow hotels and restaurants to open. —