Hotel Development

AC Hotels by Marriott opens first hotel in Middle East and Africa in South Africa’s Mother City

By on Dec 5, 2018

188 room AC Hotel Cape Town Waterfront celebrates the brand’s European soul and Spanish roots with classic modern design

DUBAI, United Arab Emirates, December 5, 2018/ — AC Hotels by Marriott (, Marriott International’s ( European-inspired lifestyle brand, today announced the opening of AC Hotel Cape Town Waterfront marking the debut of the brand in Middle East and Africa. Owned and developed by the Amdec Group, the hotel demonstrates the sophisticated and timeless European design that is true to the AC Hotel brand, interpreted for its Cape Town location. Conveniently located just minutes away from the buzzing Victoria & Alfred Waterfront, the hotel is just a 25-minute drive from Cape Town International Airport within the city’s thriving central business district.

“We are delighted to open our very first AC Hotel by Marriott in Middle East and Africa in Cape Town, further strengthening our long-standing partnership with the Amdec Group” said Alex Kyriakidis President and Managing Director Middle East and Africa Marriott International. “The opening of this hotel reinforces our commitment to driving growth for our lifestyle brands in South Africa in response to a continued demand from discerning travelers seeking hotels with style and functional design, while also providing unique and authentic experiences.”

Commenting on the announcement, James Wilson, Amdec Group CEO says: “We are proud to pave the way for Marriott International’s growth plans in South Africa and help to open up new markets for the world’s leading hotel company and its many loyal guests from around the globe. The Yacht Club mixed use development, where the AC Hotels by Marriott is situated, is the second property in our portfolio of iconic precincts to welcome Marriott, with Melrose Arch in Johannesburg being the first, and Harbour Arch in Cape Town, to follow.  We are thrilled with the opening of AC Hotel Cape Town Waterfront and believe it will provide another great place for international tourists to stay when visiting the city. It is exciting to be part of creating new dimensions for hospitality and tourism in the country and, by doing so, provide more opportunities for visitors and locals alike.”

With 188 spacious and stylish yet efficiently designed rooms that boast unparalleled views of the imposing Table Mountain, Lion’s Head and Signal Hill, AC Hotel Cape Town Waterfront introduces a “new way to hotel” to the dynamic city of Cape Town. The hotel houses the signature AC Lounge, a creative hotspot by day and social hub by night that serves local craft and as well as expertly made signature beverages. Guests can savor the brand’s Spanish roots with delectable tapas from fresh and locally sourced ingredients at the AC Kitchen or have a quick bite at the AC Market, offering convenient grab and go.

Other features include the AC Library, a quiet space lined with interesting and ever-evolving reading material tucked away from the buzz as well as a fitness center with state-of-the-art equipment. Located within walking distance from the Cape Town International Convention Centre, it also features four flexible meeting rooms and a boardroom with a total of 250 sqm of event space, boasting natural light and stunning Harbour views.

“With the Spanish heritage of the AC Hotels by Marriott brand, our design-driven hotel brings new inspiration to the city,” said Michael Liffmann, General Manager of AC Hotels Cape Town Waterfront. “We provide everything essential you need – and nothing you don’t – creating a seamless, tranquil and frictionless experience for our guests, whether they’re traveling for business or leisure.”

The hotel’s green status also sets it apart from other establishments in the Mother City. Some of its green initiatives include: a desalination plant; population sensor lighting to save power; heat pumps to supply hot water, eliminating the use of heat elements, as well as biodegradable straws and packaging. “In the age in which we live, we simply cannot ignore that our precious natural resources are being depleted faster and faster, before we’re even able to identify replacements or alternative methods. At AC Hotel Cape Town Waterfront, we are committed to introducing green initiatives to help save our planet and conserve it for future generations,” added Liffmann.

AC Hotel Cape Town Waterfront is a significant addition to Marriott International’s fast-growing portfolio in South Africa. Protea Hotels by Marriott, Marriott Hotels, Autograph Collection, Westin and Sheraton are some of the other brands that are currently present in the country today.

Distributed by APO Group on behalf of Marriott International, Inc.


PRESS RELEASE: Marriott International and Landmark Africa Group announce signing of renaissance Lagos hotel and Marriott executive apartments

By on Nov 16, 2017

The 25 floor hotel will feature the 216 room full service Renaissance Lagos Hotel and 44 room Marriott Executive Apartment offering extended stay apartments with space, ambience and the privacy of residential living

LAGOS, Nigeria, November 15, 2017/ — Marriott International (NASDAQ: MAR) ( and Landmark Africa Group ( today announced the signing of Renaissance Lagos Hotel and Marriott Executive Apartments. Slated to open in 2020, the hotels will be located within the Landmark Village precinct, a premier mixed-use, business, leisure and lifestyle development along the Atlantic Ocean waterfront in Victoria Island, the central business district of Lagos.

“We are excited to partner with the Landmark Africa Group on this project. With the rapid pace of urbanization more and more guests are looking for the value, the convenience and the vitality that mixed-use provides. The Renaissance Lagos Hotel and Marriott Executive Apartments will be a significant addition to our strong Nigeria portfolio. There is a growing need for high caliber short and extended stay lodging in Nigeria and we believe the two hotels together will help bridge this gap,” said Alex Kyriakidis, President and Managing Director Middle East and Africa, Marriott International.

The 25 floor hotel will feature the 216 room full service Renaissance Lagos Hotel and 44 room Marriott Executive Apartment offering extended stay apartments with space, ambience and the privacy of residential living. The hotels will offer a wide range of amenities, including local and international restaurants, spa facilities, a fitness center, and an infinity pool with access to a 100-meter-long boardwalk overlooking a vibrant beach club offering exciting watersports.

“Marriott International is synonymous with quality and unique lifestyle experiences globally, which we, at the Landmark Africa Group continuously strive to align ourselves with. We look forward to bringing Marriott’s hospitality and passion for excellence to the Landmark Village setting a new benchmark for mixed-use developments in the region,” said Paul Onwuanibe, Chief Executive Officer Landmark.

Designed to be the first Lagos equivalent of the Rockefeller Centre in New York, Canary Wharf in London, Rosebank in Johannesburg and Victoria & Alfred Waterfront in Cape Town, the Landmark Village features office spaces, luxury apartments, high end retail as well as international restaurants. It is rapidly emerging as a leading mixed-use development on the West African Coastline.

Distributed by APO Group on behalf of Marriott International, Inc..

Media contacts:

Landmark Africa Group

Anjali Mehra

About Landmark Africa Group:
Landmark ( began its operations in 1997, and is today recognized as a leading real estate services company in Africa, with a 150,000sqm development portfolio that comprises high rise commercial headquarters of several multi-national firms, retail developments, state of the art hospitality and conferencing facilities, and vast land banks along the Atlantic Ocean coastline.

Landmark is a financially stable and well capitalized enterprise. The Group is established with offices in the United Kingdom and 5 countries across Africa including Nigeria, Ghana, South Africa, Kenya and Ivory Coast. Their mission is to provide world-class business and leisure environments to improve the work-life balance of multi-national and domestic clients seeking an exclusive one stop shop setting in Africa.

You can find out more about the Landmark Africa Group by visiting or connect with them @LandmarkAfrica on Facebook, Twitter and Instagram.

About Marriott International:
Marriott International, Inc. (NASDAQ: MAR) ( is based in Bethesda, Maryland, USA, and encompasses a portfolio of more than 6,200 properties in 30 leading hotel brands spanning 125 countries and territories. Marriott operates and franchises hotels and licenses vacation ownership resorts all around the world. The company also operates award-winning loyalty programs: Marriott Rewards®, which includes The Ritz-Carlton Rewards®, and Starwood Preferred Guest®. For more information, please visit our website at, and for the latest company news, visit In addition, connect with us on Facebook ( and @MarriottIntl on Twitter ( and Instagram (


Carlson Rezidor continues to lead Africa’s hotel pipeline

By on Jun 24, 2016

Carlson Rezidor, one of the world’s largest and most dynamic hotel groups worldwide with over 1,400 hotels in 115 countries, is accelerating its growth strategy in Africa. The group has opened five Radisson Blu hotels in the first six months of 2016 and signed four new hotels including the first Quorvus Collection in Africa. The group is also entering its 28th country in Africa and taking the Park Inn by Radisson brand to the Indian Ocean islands.

In 2016, Carlson Rezidor Hotel Group opened five Radisson Blu properties serving the upper-upscale segment: Radisson Blu Hotel Nairobi Upper Hill in Kenya (271 rooms); Radisson Blu Hotel, Marrakech Carré Eden in Morocco (198 rooms); Radisson Blu Residence with 187 luxury hotel apartments in Maputo, Mozambique (the group’s first residence concept in Africa); Radisson Blu Hotel Abidjan Airport, Ivory Coast (261 rooms) and Radisson Blu Hotel 2 Février in Lomé (320 rooms), host of the first Africa Hotel Investment Forum in West Africa in Togo.

Speaking at the opening of the Africa Hotel Investment Forum, Wolfgang M. Neumann, President and CEO of The Rezidor Hotel Group said, “Africa is Rezidor’s biggest growth market. Our group’s total portfolio comprises 69 hotels in 28 countries, with over 15,000 rooms in operation or under development. Radisson Blu leads the way with more hotel rooms under development than any of the other 85+ hotel brands active in Africa today. Our ambition is to be the leading player in the travel and tourism sector across the continent.”

Carlson Rezidor also announces the signing of its first Quorvus Collection in Africa: the 5-star, 244-room luxury Emerald Grand Hotel & Spa in Lagos, Nigeria. The group also signed a new Radisson Blu Hotel Harare in Zimbabwe (245 rooms), a Radisson Blu Hotel in Durban Umhlanga (207 rooms) and a Park Inn by Radisson in Quatre Bornes, the new commercial hub of Mauritius.

Rezidor’s Executive Vice President & Chief Development Officer, Elie Younes added: “In the last 24 months, we have signed a new hotel deal in Africa every 37 days. And it’s not just about signing hotels; we are delivering our pipeline. We have opened a hotel in Africa every 60 days. In South Africa alone, we now have 14 hotels. In 2016 and beyond, we aim to maintain this great momentum by opening four more hotels in the second half of 2016.”

Hosted by the Government of Togo, Africa Hotel Investment Forum will focus on hotel development and finance in Africa. How to drive tourism and attract more than just the business traveler. The event connects hotel developers, hotel owners, hotel groups, banks, equity funds, property funds, hotel consultants, advisors and hotel professionals from the international and local markets, driving investment into hotel projects across Africa.

“The African continent is a powerhouse of exponential growth of the hotel industry”, said Elie Younes. “Rapid urbanization and economic growth, combined with favorable demographics, has resulted in a shortage of quality internationally branded hotels. This means there are huge opportunities for sustainable and quality growth for world-class international hotel operators like Carlson Rezidor Hotel Group.”

23 JUNE 2016

STR: Middle East and Africa hotel pipeline for May 2016

By on Jun 21, 2016

LONDON—STR’s May 2016 Pipeline Report shows 153,818 rooms in 546 hotels Under Contract in the Middle East and 56,413 rooms in 295 hotels Under Contract in Africa. Under Contract data includes projects in the In Construction, Final Planning and Planning stages but does not include projects in the Unconfirmed stage.

The Under Contract total in the Middle East subcontinent represents a 32.7% increase in rooms Under Contract compared with May 2015 and an 18.7% year-over-year increase in rooms In Construction. The Middle East reported 81,363 rooms in 252 hotels under construction for the month.

The Under Contract total in the Northern Africa and Southern Africa subcontinents represents a 28.1% increase in rooms Under Contract compared with May 2015 and a 33.9% year-over-year increase in rooms In Construction. Africa reported 30,737 rooms in 158 hotels under construction for the month.

Among the countries in the Middle East and Africa, Saudi Arabia reported the most rooms In Construction with 34,680 rooms in 77 hotels. United Arab Emirates followed with 27,344 rooms in 93 hotels. Three other countries each reported more than 3,000 rooms In Construction: Qatar (7,298 rooms in 31 hotels), Egypt (6,111 rooms in 18 hotels) and Morocco (3,025 rooms in 16 hotels).

HVS THINCs You Should Come to Cape Town

By on Jun 18, 2016

A year after the successful opening of its Cape Town office, HVS is delighted to announce the launch of its conference, THINC Africa 2016. The acronym THINC (Tourism Hotel Investment Networking Conference) could not be more apt for a conference focusing on the rapidly expanding African hotel market. With an increase in interest in hotel development throughout the continent, the event will highlight the significant benefits of investing in hotels in Africa. The risks and challenges of investment will be acknowledged, whilst discussing ways of mitigating these risks. Africa can offer some very interesting opportunities and there will be a session exploring hotels as a way of hedging currency risk in a wider portfolio. HVS London’s chairman, Russell Kett, will be moderating one of the sessions entitled “Using Hotels as a Hedge against Currency Fluctuation”. The conference will be held on 6-7 September at the Radisson Waterfront Hotel in Cape Town. Register now for the early bird discount. For more information, visit

Hotel Room Oversupply and Average Room Rates in South Africa

By on Oct 22, 2010

The Grant Thornton article entitled South African hotels not overpriced refers. In it, Martin Jansen van Vuuren, Director, suggests that hotels are not overpriced in South Africa. The writer provides a comparative analysis as evidence which puts the Crowne Plaza hotel in Rosebank against a similar hotel located in some of the most prestigious cities in the world to support his argument.

The tourism industry brings in valuable foreign currency for every inbound tourist who arrives here from our source markets. The hospitality industry creates much-needed direct employment opportunities for every tourist who visits our shores. Unemployment is generally regarded as a major contributor to the poverty situation and a direct cause of the crime problem in South Africa. For these reasons, it is easy to see how essential and important the tourism and the hospitality industries are to the South African economy. South African tourists, who happen to be the largest consumers of tourism product, have to bear the brunt of the high hotel room rates. In its key findings, P0351 – Tourism and Migration, July 2010, Statistics South Africa reported as follows: “In June 2010, there were 997 960 foreign arrivals to South Africa. The arrivals were made up of 16 368 non-visitors and 981 592 visitors. The visitors consist of 260 281 same-day visitors and 721 311 overnight visitors (tourists). The breakdown of the tourists by region is as follows: 277 345 from overseas; 398 085 from SADC countries; 22 989 from ‘other’ African countries and 22 892 unspecified”.

International tourists also find it hard to afford the high room rates when these are compared with our global competitors. Brazil, for instance, which is similar to South Africa in some respects, is geographically closer to most of the same source markets that we rely on for inbound visitors. “The upscale hotels in the major cities of Rio de Janeiro and Sao Paulo reported average room rates of between $300 and $400”. Although the South African equivalent is around $190 at current exchange rates, the difference can arguably be absorbed by the cost of travelling here, a destination which is generally regarded as a long-haul destination.

High room rates create conditions of an oversupplied market. Under normal circumstances, such a condition should bring about a decrease in average daily room rates as a result of market forces of demand and supply. Instead, what we have seen is a reduction in occupancy rates, despite the World Cup having been successfully hosted in South Africa recently.

Some countries have formulated various solutions to deal with the hotel oversupply problem. Others have not dealt with the problem and left it to market forces. As with any solution to this type of multifaceted problem, the good must be taken with the bad. Some solutions simply look good on paper only, while others that are implementable may not produce the expected outcomes. It is essential though in the first place to identify where this oversupply exists and to quantify its extent.

Hotel operators can start by discounting room rates. “The twin problem of reducing average daily room rates is that customers tend to think that the quality of the property has dropped, as well as that it is often difficult to raise them once conditions improve again”. “Instead of dropping rates, hotels are adding value, offering two-for-one deals where visitors get one night ‘free’ on top of the original booking, extras such as free bottles of wine with a dinner in the hotel restaurant or vouchers for various entertainment in the city. For the Christmas season, many held expensive buffet dinner celebrations, with entrance included in the room rate”.

Discounting average daily room rates when there is an oversupply of hotel rooms might help with occupancy rates. “However, such measures tend to only provide a temporary relief as the operators enter a price war while trying to undercut each other the whole time”. “The transparent nature of hotel pricing means short-term occupancy gains are quickly offset as competitors rapidly follow suit in cutting rates. This leads to a lower priced hotel market yielding lower revenues in the face of normally unchanged demand, proving that rate discounting alone does not induce additional hotel demand”.

The South African Reserve Bank could consider a further interest rate reduction to stimulate economic activity. South African interest rates at 10% per annum have not been this low since the 1970s. Inflation is within the target range of 3%-6% per annum. Our trading partners are also experiencing a low interest and inflation rate environment. GDP is low and an economic stimulus is required urgently.

The debate around the strength of the South African Rand is doing the rounds. Clearly, a devalued South African currency will help the export market, thereby increasing manufacturing capacity, which will in return increase domestic consumption for goods and services, including for hospitality product. A more competitive ZAR/dollar exchange rate will help make hotel rates more affordable for the inbound tourist market. However, not everyone agrees that currency devaluation will be without long term consequences.

Increasing the attractiveness of South Africa to our target markets via tourism marketing interventions and projecting the image of the country in the best possible light can help increase visitors across our borders. The South African Department of Transport could relook at increasing the number of airport slots for international airlines. This would help bring more visitors, bring down costs through competition.

In response to one of the worst recessionary environments that the world has experienced in recent times, the United States was the one of the first countries to bail out its industries with economic handouts. “But perhaps most daunting was the introduction of the National Asset Management Agency in Ireland. The program was designed to take over toxic assets throughout the country…”. The NAMA is an agency of the Irish government. One of its first actions was to take control of more than a hundred hotel properties with a view to avoiding insolvencies of the operators through paying out the creditors and then taking out the excess stock from the market. In this way, competition in the market was minimised and room rates were stabilised for the entire market. Although the taking out of competition is not always a good thing in a market economy, especially when taxpayers’ funds are utilised to achieve this goal, such drastic action is a further indication of the seriousness of the hotel room oversupply problem and the extent to which some countries would go to protect their tourism industries.

“NAMA may help alleviate the issue of oversupply of hotel rooms by forcing operators to review and make changes to their operations, for instance requiring all or part of a hotel to be converted to a different use or to incorporate seasonal closures, where NAMA believes that such changes will enhance the commercial viability of the hotel”. This is a rather draconian proposal because most hotels are designed with a specific market segment in mind and as such are not easy to realign without wasteful capital expenditure. However, to try to convert a hotel to an alternative use, for instance a office premises, is even less realistic for the same reasons. Office and hotel property investment life-cycles also tend to track one another. The Johannesburg Sun was mothballed in the mid-1990s. It was reopened in 2002 as a watered-down version of its glorious self.

The Ernst & Young House, an office block building in the centre of Johannesburg, was also mothballed and it stood that way for very many years. It was subsequently converted amid much media fanfare into a residential block. This was achieved at very considerable cost as the major cost component was the finishing works. The fact that the structural framework was already in existence did not provide a major cost advantage for the new owners, as the services had to be significantly re-engineered.

The Carlton Hotel in Johannesburg was also mothballed in the late-1990s. Although these examples have more to do with the impact of  urban morphology than with the hospitality industry dynamics, even when Johannesburg was experiencing a revival, not many people showed an interest in returning these two hotel properties to their glory days.

“Hotels are effectively in the property industry, and construction costs are the capital outlay that hotel incomes and profits have to provide a return on. For the same 8 years, tender price escalation, as an indication of construction costs, has averaged 12%, indicating that hotel returns are diminishing”. This argument creates a concern. The first rule of a viability study is that new investments must be introduced into the market only if the potential for the market to be able to sustain the room rate. By the end of 2007, most market commentators were already forecasting a that the “property bubble” was due to burst. The then Reserve Bank Governor was frantically issuing warnings to businesses and consumers alike to reduce their debt and to delay taking on more. Most of those hotels that entered the market without taking into consideration those warnings were really not supposed to have been built in the first place.

The prevailing environment of higher than inflation building costs when the country is experiencing deflationary conditions is also to blame for the high average daily room rates. The elements that make up building rates for the compilation of building costs are made up of materials, labour and overheads. In the recent past the rise in materials component has been much more than inflation and other building cost indices. The largest construction companies were also recently investigated by the Competition Commission for anti-competitive behaviour. Some of them owned up and were penalised.

Hotel owners could alternatively settle for a reduced return on their property investment in comparison to competing investments. This intervention would hopefully have the desired effect of reducing investment in new properties and help with the absorption of the existing oversupply.

For the investor or lender, the perception that average daily room rates is higher than it ought to be means that hotel properties are currently overvalued. Under conditions of overvalued properties, lenders tend to want to revalue the loan-to-value ratios on their loan books, with the undesirable result that under certain circumstances they might want their debtors to reduce the capital balance and their loans ahead of the repayment schedule.

Some bankers have gone further than conducting debt reviews. Instead of recalling loans they have on hotel properties they have gone and interfered with the market dynamics by unilaterally dropping rates. “Established hoteliers have bitterly criticised the actions of so-called ‘zombie hotels’ which have been taken over by banks and are undercutting rates for the sector in general”.

Hotel room oversupply has led to many problems for all involved in the industry, whether as customers or operators and owners. The solutions are limited, both in number and applicability. The solutions can also take a long time to achieve the desired result.

The following articles, listed in no particular order, were referred to and excerpted in drafting this article. Some of the links below will take you directly to the article itself. In certain circumstances you might have to go to the website itself by deleting the URL up to the address point and then searching for articles or publications.

The Tourism Industry and Hotel Development in South Africa

By on Aug 25, 2010


For many years the tourism industry in South Africa was classified as only one of the numerous secondary contributors to the country’s gross domestic product. The primary industries were mining, most especially gold, manufacturing and agriculture among others. However, when gold started losing its shine, in a manner of speaking, other industries started to come to the fore. As one of South Africa’s other exports, like gold, tourism started to raise its hand to also be counted. However, it still did not occupy centre stage. Even after the White Paper on Tourism of 1996 was published, tourism was still accommodated as a Sub-Ministry within the Environment and Tourism Department. Even then, it was still not identified as a main priority.

It was only after visitor numbers to South Africa started to rise phenomenally that the authorities started to take notice. The events which had triggered this phenomenon were the erstwhile but very successful general elections of 1994 and the Rugby World Cup of 1995. South Africa became the place to be! Although it is generally regarded as a long-haul destination, tourists still came flocking in even after the two trigger events had long passed. So, what made these people to come flocking in?

South Africa is attractive to tourists due to its physical beauty as well as its mild weather. Natural disasters are very rare. We have an abundance of mineral resources. We have an open economy, which attracts investment, and with it many immigrants. We also have an open-border system, whereby very many people from the north of the continent arrive in droves as political refugees.


Tourism development involves a broad ownership base which means that many people benefit from the tourism industry. One of the economic sectors that derive tremendous benefit from tourism development is the hospitality sector and by extension hotel properties. Hotel properties must be developed all the time in order to support tourism development. With increased tourism development, broadbased economic development increases, which in turn benefits the broader South African community.

Although the South African government was at the forefront of supporting the country to attain the rights to host the 2010 FIFA World Cup, the State still needs to put more funding into promoting tourism. Our competitors are still directing more funding into promoting their countries. With the spotlight shifting away from South Africa to Brazil as a result of being the next nation to host the World Cup in 2014, we cannot afford to lag behind. We have a great product and the right mix of people and export credentials to compete successfully.

Then there is the image issue we need to think about. Issues that get interpreted as signs of political instability are all over the media. Service delivery strikes, no matter where they originate, have an impact on the image of South Africa. Of course there will always be the extreme tourist; one who will always go political hotspots to derive a thrill. However, the majority of our visitors prefer to come here for the milder attractions we have to offer. Do we report only the good news and hope that continuing to do so will eventually lead the world to believe that we do not have problems? Or do we continue to report the bad news as prominently as we are doing now, and risk perpetuating the old stereotype that the African continent is incapable of looking after itself?

The responsibility of growing the tourism industry lies with the State. The good thing is that the South African government has been at the forefront of developing tourism. From these overtures from government, the private sector can only take the cue and forge ahead with the development of tourist attractions.


The hotel industry in South Africa was catapulted into the high road by Sol Kerzner and the South African Breweries with the establishment of Southern Sun Corporation in the late 1969. Since then, many hotels have been built and renovated many times over. Prior to the recession of 2008-9 FIFA was adamant that South Africa has a shortage of hotel bedrooms for the 2010 World Cup. Well, things have changed very rapidly over the last eighteen months or so. Many hotels were built in the intervening period. Arguably theses were built in order to respond to this shortage as per FIFA. The expected numbers did not arrive to take up the room-nights. We now find ourselves in a situation of an oversupply of hotel room-nights.

The financing of hotels is a very problematic subject. Banks still view hotels with extreme suspicion. The revenues are too volatile, they say. As a result it is not possible to forecast how the loan is going to perform over the period it is extended. On the one hand, if they had a lease from a ‘reputable’ hotel operator, they say, then they would happily extend loans for hotel developments.

On the other hand, hotel operators are generally not willing to enter into leases with the hotel owners, thereby providing guarantees to bondholders that the loan is covered by proper collateral. As a result of this impasse, hotel developments are less prevalent than retail and commercial developments.

There is an old adage in the investment world which says the higher the risk, the higher the return. I know of a company which invests in hotel properties as well as retail and offices properties. Rand for Rand, over many years, the hotel property investments provided the highest return for them. So, even under these depressed trading conditions, they are still investing aggressively in hotel properties.

Two major international hotel groups have recently announced plans to either enter the South African market or to increase their current investment. These companies are Marriott International and the Hilton Group. It is hoped that these new initiatives were triggered by more than just the successful hosting of the FIFA World Cup, but also by something more sustainable than that.

In other parts of the world, real estate investment trusts have been formed specifically for the purposes of investing in hotel properties. This is because of the reluctance of bankers to fund hotel property developments. In South Africa only one Fund has been formed. This is the Hospitality Property Fund. At inception, banks were reluctant to extend lending to this Fund too, due to the underlying asset being hotel property. Such motives of the banks need to be questioned. It is almost an open secret among property practitioners that banks sometimes provide lending to funds that have as an underlying asset properties that they would normally not touch on an individual basis. The latter are characterised by poor valuations, dilapidated properties and bad locations, to name a few.


Although this article mentions that South Africa has an oversupply of roomnights, this this phenomenon has not been reported to have been formally established. Operational variables such as low occupancies and revenues and average room rates alone are not enough to use as evidence to arrive at the conclusion that an oversupply definitely does exist. This reported oversupply could be referring to all types of hospitality, thus accounting for bed and breakfast establishments, the latter not being classified as formal hotels. Oversupplied or not, the formal hotel industry needs more hotels to attract tourists.