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"The Grace has been managed by the Zimbabwe Sun group, which took over several hotels in South Africa in readiness for the World Cup last year and is n..."
News that the five-star Grace Hotel in Rosebank, Johannesburg, will close its doors at the end of August and owners Hyprop are considering what to do with the property is the latest in a catalogue of doom coming from the hotel industry, struggling in a situation of over-supply after the World Cup combined with a slow recovery from recession in its main source markets overseas and the normal winter slowdown.
The Grace has been managed by the Zimbabwe Sun group, which took over several hotels in South Africa in readiness for the World Cup last year and is now pulling out of the five-star market in this country because revenues are falling as customers trade down to four- or three-star establishments.
The Grace is the latest of several hotels in our main cities to close. They include the Vendome, Green Dolphin and historic Alphen in Cape Town – currently South Africa’s main tourist destination.
But some hotels that were struggling have been taken over by successful groups, including the Muslim-owned Coral International on the fringe of Cape Town’s historic Bo-Kaap area, which has been converted into a Hilton International.
Hilton has set up an office in Cape Town to look for opportunities to take over the management of other hotels, to be relaunched under the names of some of its brands.
Another US-based group, Marriotts, is also looking for local hotels to manage. So is South African group Protea Hotels, which has set up a budget of R2 billion to enable it to take over “distressed” hotels with the potential to do well.
Some internationally known hotels, including the five-star Cape Grace and Mount Nelson in Cape Town, are still attracting guests prepared to pay for luxury accommodation and service, and those in the vicinity of convention centres still have high occupancy rates while large conferences and exhibitions are on.
Dirk Elzinga, the Cape chairman of the Federated Hospitality Association of South Africa, said most hoteliers were still confident that tourists and business travellers would return in the New Year.
Among those holding this view is Sandro Fabris, the regional manager of the international Orient Express group and general manager of the historic Mount Nelson Hotel in Cape Town, which is still attracting well-heeled international visitors from countries with strong currencies. Drawing on wide international experience, he said it was normal for big events such as the World Cup to result in an oversupply of hotel rooms and to be followed by a drop in demand.
He spoke out against the price-cutting taking place in many hotels in order to fill rooms rather than lose money by allowing them to remain empty. Admitting that the Mount Nelson had fewer guests than usual and was expected to average 42 percent occupancy for this year, he said hotels that slashed prices would make it hard to return to their former levels of profitability and it could take years to do so.
Even with the present strength of the rand, exchange rates meant that South African hotel rates were not high for many foreign visitors. “It is a huge mistake to drop prices dramatically. Instead, the slowdown is a perfect opportunity to retrain staff and find ways of increasing value to customers in readiness for the upturn.”
Meanwhile, he said the hotel’s new Planets fine dining restaurant, which had cost R5.5 million and was expected to be used mainly for special celebrations, was half full in the evenings although some of Cape Town’s best restaurants had closed from lack of custom. Plans to revamp the hotel’s Oasis restaurant, which serves buffet meals, were still on track but had been postponed until June to keep it available for the coming holiday season.
The general manager of a hotel in Cape Town’s Waterfront who asked not to be named, said occupation levels at his hotel were “not bad for the season” but rates were being adjusted to below those that could be achieved in better times, particularly as there was now keen competition for guests looking for the most favourable deal.
The rate being charged varied from day to day, according to the level of occupation and to whether the guest was a corporate client or an individual. Normally the best available rate, which could vary from 20 percent or 30 percent below that charged in normal times, was offered to corporate travellers.
A spokesperson for Southern Sun hotels said it was not suffering in the downturn and expected demand to rise by the end of the year.
A forecast by consultants PwC advises that an upturn can be expected to start at the beginning of next year and the situation to continue to improve from then until 2015, although it might take until 2013 for a significant rise in room occupancy.
Busrep.co.za
The Grace has been managed by the Zimbabwe Sun group, which took over several hotels in South Africa in readiness for the World Cup last year and is now pulling out of the five-star market in this country because revenues are falling as customers trade down to four- or three-star establishments.
The Grace is the latest of several hotels in our main cities to close. They include the Vendome, Green Dolphin and historic Alphen in Cape Town – currently South Africa’s main tourist destination.
But some hotels that were struggling have been taken over by successful groups, including the Muslim-owned Coral International on the fringe of Cape Town’s historic Bo-Kaap area, which has been converted into a Hilton International.
Hilton has set up an office in Cape Town to look for opportunities to take over the management of other hotels, to be relaunched under the names of some of its brands.
Another US-based group, Marriotts, is also looking for local hotels to manage. So is South African group Protea Hotels, which has set up a budget of R2 billion to enable it to take over “distressed” hotels with the potential to do well.
Some internationally known hotels, including the five-star Cape Grace and Mount Nelson in Cape Town, are still attracting guests prepared to pay for luxury accommodation and service, and those in the vicinity of convention centres still have high occupancy rates while large conferences and exhibitions are on.
Dirk Elzinga, the Cape chairman of the Federated Hospitality Association of South Africa, said most hoteliers were still confident that tourists and business travellers would return in the New Year.
Among those holding this view is Sandro Fabris, the regional manager of the international Orient Express group and general manager of the historic Mount Nelson Hotel in Cape Town, which is still attracting well-heeled international visitors from countries with strong currencies. Drawing on wide international experience, he said it was normal for big events such as the World Cup to result in an oversupply of hotel rooms and to be followed by a drop in demand.
He spoke out against the price-cutting taking place in many hotels in order to fill rooms rather than lose money by allowing them to remain empty. Admitting that the Mount Nelson had fewer guests than usual and was expected to average 42 percent occupancy for this year, he said hotels that slashed prices would make it hard to return to their former levels of profitability and it could take years to do so.
Even with the present strength of the rand, exchange rates meant that South African hotel rates were not high for many foreign visitors. “It is a huge mistake to drop prices dramatically. Instead, the slowdown is a perfect opportunity to retrain staff and find ways of increasing value to customers in readiness for the upturn.”
Meanwhile, he said the hotel’s new Planets fine dining restaurant, which had cost R5.5 million and was expected to be used mainly for special celebrations, was half full in the evenings although some of Cape Town’s best restaurants had closed from lack of custom. Plans to revamp the hotel’s Oasis restaurant, which serves buffet meals, were still on track but had been postponed until June to keep it available for the coming holiday season.
The general manager of a hotel in Cape Town’s Waterfront who asked not to be named, said occupation levels at his hotel were “not bad for the season” but rates were being adjusted to below those that could be achieved in better times, particularly as there was now keen competition for guests looking for the most favourable deal.
The rate being charged varied from day to day, according to the level of occupation and to whether the guest was a corporate client or an individual. Normally the best available rate, which could vary from 20 percent or 30 percent below that charged in normal times, was offered to corporate travellers.
A spokesperson for Southern Sun hotels said it was not suffering in the downturn and expected demand to rise by the end of the year.
A forecast by consultants PwC advises that an upturn can be expected to start at the beginning of next year and the situation to continue to improve from then until 2015, although it might take until 2013 for a significant rise in room occupancy.
Busrep.co.za
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