Henk Bredenoord of Status Hotels assesses the state of the industry

Henk Bredenoord, operations director of Status Hotels and an experienced hotelier, shares some of his thoughts on the recent news in the hospitality industry:

“Here are just a few comments about the articles that have been doing the rounds with regards to hotels going bankrupt because the business is so bad.

“If you look around at the hotels in general, and I am referring to Gauteng and more specifically the Johannesburg side, then in general the hotels are about 10% down on last year which had the 2010 Fifa World Cup in it and hotels in Gauteng in particular did get some business out of it.

“If you look at the hotels that surround the two African Sun Hotels (The Grace in Rosebank and The Lakes in Benoni), their competitor set have all run at 60% to 70% occupancy for the past year and things look better going forward. The two hotels, now closed, had increased their expenses without correspondingly increasing revenues.

“The Southern Sun Grayston is in lease negotiations and if they don’t sign a new lease like they did two years ago, then it is just a commercial decision and does not mean that the hospitality business is bad.

“The Southern Sun Grayston is an old hotel on expensive property that needs to be redeveloped into a modern ‘green’ building. Rumour has it that the Sun International head office lease on Fredman Drive is also almost up and that they are looking at redeveloping the Southern Sun Grayston property into a modern building incorporating their offices and a 100-bedroom hotel.

“Sun International reported in their recent financial press release that their hotels had a 66% occupancy for the past year so, like most other hotels, they are down in occupancy terms but it is not as if we have to slit our wrists. The hotels are all still running profitably and it’s just a time to reassess operations and trim a bit of the fat off and have a good look at how we can make sure that our guests enjoyed our hospitality and will return.

“Cape Town has gone through a normal winter season where everyone wants to cut their wrists, and then now in spring when the STO business floods in and the hotels fill up all is forgiven. It’s important that in Cape Town we look at the South African market for December and January and offer our own tourists value for money packages and then we will have a good season in Cape Town for the Christmas holidays.

“The Diaz hotels near Mossel Bay have always struggled from when they were built, as does the entire coast when they hit their four – to five-month low season when nothing happens except in Port Elizabeth and George, which have some commercial business.

“There are hoteliers that have faith in the future, and in Sandton I know of one 60-bedroom, four-star hotel and one 100-bedroom hotel that will open in the latter half of 2012. And then we also have the Village Walk development that will incorporate a new 350-room Balalaika Hotel to open in 2013.

“There are also hotels in the offing in other provinces such as Polokwane, Limpopo (two 100-bedroom hotels, one of which is the Radisson Park Inn).

“I think that the hospitality industry has a lot of scope to grow in South Africa and specially if we look at other regional centres where the old infrastructure does not meet the new current demands, and where also development has outstripped demand and we see a blossoming of lodges and B&B’s but where the actual requirement is a full-service hotel.

“In the leisure industry there is also a lot of scope to grow our industry. If one looks at other continents, the bulk of business comes from one’s own continent, whereas in Africa, we look at the Americas, Europe and now Asia for tourism growth where we should be focusing on Africa for short-haul tourism.

“The one problem here is of course our airlines that make the short-haul trips very expensive. It is often cheaper to holiday in Europe than to fly somewhere in Africa. This applies also to visitors from Africa flying to South Africa.

“At Status Hotels, we intend to look at where there is market demand and grow the company not just in South Africa but also the rest of Africa and Europe. We believe that there is scope everywhere for the South African hospitality and hotel standards, and we intend to export these to Africa and Europe. Our target is to grow Status Hotels to over 20 hotels by 2012.”

www.hotelandrestaurant.co.za

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