As the 2010 Soccer World Cup approaches, there is much debate about the
benefits of this major global event for South Africa. Joop Demes, MD of
Pam Golding Hospitality, says the increasing exposure South Africa is
receiving worldwide due to the 2010 Soccer World Cup is the equivalent
of hundreds and hundreds of million rand in free advertising for the country's
hotel and tourism industry.
"This will only increase as we build up to the event and will be
sustainable due to the unique experience we offer tourists visiting our
country. This is coupled with the fact that the cheaper South African
rand will indeed play an important role towards long term sustainability,"
says Demes.
"During the past 16 months Golding Hotel Investment Consultants has
facilitated new hotel developments with a total value of approximately
R1.6 billion, with 50 percent of these being with international operators.
In addition, over the past 12 months the same company has facilitated
the sale of four hotel and game lodge operations with a total value of
R625 million - all for overseas buyers, while Pam Golding Hospitality
& Tourism Consultants is currently conducting six feasibility studies
for new hotels, three of which are on behalf of an international operator.
"Further to this, one of our clients, Protea Hotels, is currently
involved in 43 new hotel projects which are at various stages and notably,
predominantly located in Southern Africa. Another client, the International
Arabella/Starwood Group, is presently investigating their involvement
for six new hotel projects in South Africa," says Demes.
He adds that of significance is the fact that during 2007, and for the
second year in succession, the South African hotel market as a whole experienced
a double digit increase in Revpar (revenue per available room ie the product
of room occupancy and average room rate), with the year 2007 up by a very
impressive 16.3 percent compared to 2006. During 2007 and compared to
2006 the five star hotels increased their Revpar by 19 percent while the
overall Johannesburg Revpar growth was 25.5 percent, as quoted by the
Deloitte Hotel and Benchmark Study.
Leonard Brewer and Peter Bruil, directors of Pam Golding Lodges &
Guesthouses (PGLAG), report that in the run-up to 2010 South African buyers
are demonstrating an increasing appetite for acquiring well-located guesthouses,
particularly in the Western Cape. The company, which specialises in the
marketing of lodges and guesthouses mainly priced from R5-R50 million
and ranging in size from six to 40 rooms, has over the past 12 months
alone (to March 2008) concluded transactions to the total value of over
R130 million.
"To date some 70 percent of the guest lodges we have sold have been
to overseas buyers or South Africans returning to the country. This is
due to the fact that international, mainly European buyers have adopted
a longer planning horizon in regard to capitalising on this forthcoming
high-profile event. Now we find that local buyers are coming to the fore
and becoming increasingly active in this sector of the insurance industry
as they realise the potential positive implications for tourism,"
says Bruil.
Adds Brewer: "Going concerns situated in prime tourism areas, such
as the Cape Winelands, Cape Town Atlantic Seaboard and to a somewhat lesser
extent the Garden Route - due to its greater seasonality and shorter average
length of stay - offer good returns and are less prone to any possible
risk factor. As a result sound capital growth together with a steady income
from operations can be expected, coupled with the obvious spin-offs from
heightened global exposure as a result of the Soccer World Cup."
Brewer points out that the World Cup event provides a major PR opportunity
for the tourism industry. "Bearing in mind that this takes place
during our low tourism season, coupled with the fact that South Africa
is still a relatively young as opposed to a mature tourism destination,
we will reap the benefits of huge increased global exposure to our numerous
tourism attractions. For the tourism industry this is not just about the
limited duration of the event itself, as is evidenced by the sizeable
investment being made here by major global hotel operators experienced
in investing in developing tourism markets. As the host country, it is
in fact a four year period of free marketing and exposure - wherein we
can capitalise on the growing interest in South Africa and our tourism
industry."
One of the noteworthy transactions concluded recently by PGLAG is the
sale of the Cape Heritage Hotel and Heritage Square in central Cape Town,
a 4-Star, 15 room hotel with leases for restaurants and shops, sold close
to the asking price of R35 million. With historic connections to South
Africa the new owners desired a change of lifestyle, while Cape Town's
central area enjoys generally high occupancies and interest from both
the tourist and corporate markets.
Additional transactions are currently being negotiated by PGLAG for establishments
in Gauteng and the Western and Eastern Cape regions at a further value
of some R80 million.
,
2008-05-09
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