South Africa’s iconic Blue Train could be recapitalised and expanded following the announcement of a new public–private partnership between State-owned freight logistics utility Transnet and tourism and leisure group Sun International. Print Send to Friend 0 5 The five-star luxury “hotel on wheels” – which was first launched in 1923, upgraded in the 1930s and re-entered service in 1946 after the Second World War – remains a popular tourist attraction for domestic and, especially, international tourists.
However, with occupancy rates having fallen to 70%, along with profitability, in April, Transnet invited bidders to submit proposals to partner with it in developing and piloting a new marketing strategy for an initial period of up to 18 months. Sun International was among two of five initial bidders short-listed and on Tuesday acting Transnet CEO Siyabonga Gama announced that the gaming and hospitality company had been selected as the winning bidder.
A joint business plan would be developed over the coming six months, outlining a new “value proposition” for the train, which was likely to include new investments, route expansions and possibly the integration of gaming into the experience. Also on the cards was the creation of package deals that made it more accessible to domestic tourists. Domestic tourists generally viewed the train as out of reach, with packages of between R13 000 and R21 000 per person sharing, depending on the season.
Speaking at the announcement, held in the Blue Train Lounge at the historic Pretoria Station, in Gauteng, Sun International CEO Graeme Stephens said it was premature to offer details as to the future commercial terms and investment plans. However, he promised that Sun International would include black economic-empowerment partners in any future commercial arrangement. Stephens saw significant opportunity to extract synergies between the Blue Train and the group’s own five-star properties, including the Table Bay Hotel, The Palace of the Lost City and the Royal Livingstone, in Zambia – destinations that were all accessible by rail.
“In the preliminary phase it’s about tapping into the understanding we have of the various source markets and Transnet’s understanding of rail to evolve a business plan,” he explained, adding that investment and routing decisions would flow from that plan. Gama indicated that Transnet, which was focused on freight logistics, but had retained the Blue Train as its last passenger-rail business offering, hoped to tap into Sun International’s understanding of the fast-evolving tourism market, as well as its package and booking systems.
He expected Blue Train occupancy to rise to between 90% and 100%, but stressed that Transnet was also keen to back a growth strategy, which could involve investments into additional trains and coaches and the opening of new route networks. Transnet’s goal was to recapitalise the Blue Train, “which may include building new state-of-the-art train sets”, in partnership with private sector investors and operators. “At the moment we have two sets of the Blue Train and in future we may be able to build many more to extend the reach and footprint of the Blue Train,” Gama said.
Transnet recently allocated two new electric locomotives to the Blue Train, which employed over 60 people. But the current train set, which was almost 40 years old, had become expensive to maintain and operate. “We believe there is an opportunity to optimise the Blue Train by including more destinations, such as the national parks, and to recapitalise it to make it a much more sustainable offering.”