A takeover by The Capital Hotels and Apartments has thrown KwaZulu-Natal’s iconic Fairmont Zimbali Hotel Resort a lifeline.
The five-star hotel in KwaZulu-Natal’s eThekwini region, Fairmont Zimbali Resort went into voluntary business rescue in September last year – as the country’s tourism and hospitality sector was hit hard by the restrictions put in place due to the coronavirus pandemic. Pierre Berrange was appointed as the business rescue practitioner.
The resort, however, isn’t the only hotel in the province to suffer a major knock from the pandemic.
The Hilton Hotel in Durban, one of the most prestigious hotels in the province, also become the latest tourism casualty when it closed its doors temporarily in January. The Hilton group decided to close down more than a thousand of its hotels globally due to a reported steep decline in revenue.
The Capital Hotels and Apartments is in pole position to snap up the iconic resort for R240 million after it was announced as the preferred bidder for the troubled asset.
Fairmont Zimbali Hotel was developed at a cost of some R600 million by Dubai-based IFA Hotels & Resorts ahead of the 2010 Fifa World Cup.
Marc Wachsberger, the MD of The Capital Hotels and Apartments, said the mooted acquisition of Fairmont Zimbali is a start of the group’s massive expansion plans, which will see it open two hotels a year for the next five years.
“The Capital Hotels and Apartments has built its portfolio of hotels by investing in the market at times when others would not, by identifying suitable distressed properties to add depth and value to our mix of business and leisure offerings,” said Wachsberger.
“We are looking forward to welcoming guests to the property in September once the roll-out of Covid-19 vaccines has made domestic travel more appealing, and the country is beyond the anticipated third wave of the pandemic.”
The Capital Hotels and Apartments owns several high-end establishments in Gauteng including The Capital Empire.
The company also owns The Capital Mirage in Cape Town and The Capital Pearls in Durban. Wachsberger said that the company will invest R30-million in an extensive renovation and refurbishment project, including transforming suites into the flexible apartment-style accommodation that has become synonymous with the group.
Business rescue and bankruptcies in the hospitality industry mean this could be the right time to buy. Wachsberger had already indicated his company’s intention to capitalise on distressed hotel assets.
The Fairmont Zimbali Resort is one of the biggest foreign investments on the North Coast of KZN and has been a major role player in the South African hospitality industry with usage from local and national government, local tourism, as well as international visitors.
Workers in the hospitality and entertainment industry such as hotels, guest houses, restaurants, wedding venues and casinos have faced reduced working hours and earnings due to the absence of international tourists and limited intra- country movements.
The latest data from Statistics South Africa show that income from accommodation decreased by 66.8% year on year in November 2020, the result of a 52.7% decrease in the number of stay unit nights sold and a 29.7% decrease in the average income per stay unit sold.
The largest decline in income was reported by hotels, down 69.6%.
KZN’s Economic Development and Tourism Department has welcomed the R240 million deal.
Spokesperson Bheki Mbanjwa said: “The deal is conditional pending the Competition Commission’s approval and the creditors accepting the business rescue plan.
“One hundred and forty-three jobs will be saved as part of the process. What is even more interesting is that the potential buyer is planning a multi-million-rand investment on the establishment.
“Economic Development, Tourism and Environmental Affairs MEC Ravi Pillay said this augurs well for the province’s economic recovery efforts.”
Source: SA Commercial Property News http://www.sacommercialpropnews.co.za/south-africa-provincial-news/kwazulu-natal/9307-takeover-offer-may-breathe-life-into-struggling-kzn-iconic-zimbali-resort.html