Global hotel groups seek a slice of SA pie
HILTON Hotels is planning to pour more money into South Africa as competition hots up for the continent’s tourism riches.
For a start, the US group plans to convert the independent hotels it controls in South Africa into Garden Inn hotels, according to Patrick Fitzgibbon, vice-president of development for Europe and Africa.
The plan follows signs that a tourism boom is taking shape in South Africa, helped by the rand’s fall against the dollar.
Grant Thornton’s latest Tourism Business Index showed an increase in tourist spending in the fourth quarter of last year – despite the Ebola outbreak in West Africa, which prompted some tourists to cancel their trips to the continent.
Fitzgibbon was in South Africa to meet a team developing a new Garden Inn in the Namibian capital Windhoek.
Hilton’s announcement comes three months after Hard Rock International, which owns the Hard Rock Cafe, said it planned to build a hotel in South Africa. Group president and CEO Hamish Dodds said South Africa was a “really logical” place to launch its hotel.
Fitzgibbon said he was not surprised by his rival’s plans, given that Africa had “massive opportunities” in tourism.
The landmark Westcliff Hotel in Johannesburg, which has hosted celebrities such as Oprah Winfrey, Brad Pitt, Will Smith, Richard Branson and the Dalai Lama, was bought by the Four Seasons group and its 117 rooms overhauled.
The new-look Westcliff opened for business late last year, but reviews after the R200-million makeover have been mixed, specifically of the one restaurant currently open. A further four restaurants will be opened this quarter.
Perhaps scarred by this poor reception, hotel management did not respond to interview requests this week.
Other hotel groups that want to increase their foothold on the continent include Marriott International, which bought the Protea Hospitality Group for R2-billion last year.
But South African hotel groups are not taking the challenge lying down.
Tsogo Sun, which is controlled by HCI, spent R220-million renovating two key Durban beachfront hotels and has invested R100-million in refurbishing its Southern Sun Waterfront Hotel and building a new hotel, 177 Empire Place, in Sandton.
Other developments announced include the Radisson Blu Le Vendome Hotel Cape Town, the Thaba Moshate Hotel in Burgersfort and upgrades to Emperors Palace in Kempton Park and the Mmabatho Palms Hotel in Mahikeng.
Hilton has 37 hotels in Africa and plans to build 29 in the next few years.
A three-year upgrade has just started on the Hilton in Durban, a welcome sign of new investment after some volatile years following the 2010 soccer World Cup, which didn’t provide the sort of tourism riches that many had expected.
Tourism revenue grew more than 10% in 2010, but fell more than 18% in 2011, according to a report by PwC.
In 2012, it clawed back some of this ground, growing 12%.
The PwC report said that by 2018, there will be an estimated 63 600 hotel rooms available — up from 60 900 in 2013.
In the report, Nikki Forster, PwC leader of hospitality and gaming, also said capacity was growing faster than room supply, so the occupancy rate for hotels would rise to a projected 71.1% in 2018 from 58.9% in 2013. The average rate will climb to R1265 in 2018, a 6.2% compound annual increase from R935 in 2013.
Hotel room revenue is expected to climb to R20.9-billion in 2018, up 11.2% compounded annually from R12.2-billion in 2013.
Fitzgibbon said South Africa was the most competitive region on the continent.
Its faltering economic growth is not worrying him. He said Hilton was in the business of investing long term, so recent economic woes did not deter the group.
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