African Sun and Legacy Hospitality today signed an agreement to co-operate in the development of Tourism in Zimbabwe. The agreement provides for the management, refurbishment and expansion of five of African Sun’s strategic assets.
Bart Dorrestein, Chairman of the Legacy Group, explains the two companies have been working together on a master plan for Tourism in Zimbabwe over the past 18 months. “Zimbabwe has the potential to become one of the world’s leading tourist destinations. Upon the opening of the new International Airport,” says Dorrestein. “The Victoria Falls, one of the original seven Wonders of the World, is ideally placed to become Southern Africa’s gateway for Tourism. We have agreed to upgrade on a phased basis the two hotels at The Falls plus additional conference capacity. Holiday and convention potential of The Falls destination is immense.”
Herbert Nkala, the Chairman of African Sun, says appointing the Legacy Group of Hotels to manage the five hotels made perfect sense, and will come into effect from 1 October 2015. The Management Agreement, says Nkala, shall be with respect to the Elephant Hills Resort and Conference Centre, The Troutbeck Resort, Hwange Safari Lodge, The Kingdom at Victoria Falls Hotel and the Monomotapa Hotel. The initial term for the management arrangement is for ten years, with an option to renew for another two periods of ten years.
“We looked at various hotel management companies of repute and integrity to manage a selected number of hotels. The Board approached six international hotel groups to provide their global brands and participate in the Management of our hotels,” says Nkala. “These Hotel Groups were also requested to look at the feasibility of partial refurbishment and or total closure of the hotels. Of these Hotel Groups, various factors conspired to eliminate the other four from consideration with the International Hotels Group IHG retaining its right to continue with the Franchising structure with respect to the Holiday Inn Harare and Holiday Inn Bulawayo and soon to be rebranded Holiday Inn Mutare. The appointment of the Legacy Group of Hotels was a culmination of a long and arduous journey by the Board, born out of the need to immediately address the financial haemorrhaging that the Company had been going through since dollarisation in 2009. Further to this, the Company’s outside investments were diverting much needed resources from the profitable Zimbabwe operations.”
Nkala continues to say that since dollarisation the Company has not declared any dividend to the shareholders and in addition to this it has accumulated losses in excess of US$20.0 million due to a poor business model and unprofitable regional investment decisions.
“The Board needed to act with urgency to address all these issues besetting the Company. It was also apparent from the declining standards that the hotels were in need of a huge capital expenditure to match regional and international standards,” says Nkala. “The regional expansion strategy though a commendable initiative unfortunately resulted in the company’s balance sheet being highly geared with no corresponding returns being realised. Resultantly, a decision was made to disinvest from all regional operations as the Board made calculated, deliberate and significant strides to ensure a rectification of the unfavourable prevailing situation. Amber Hotel Accra, Ghana lease agreement was mutually terminated effective 31 August 2015 as a result of unsustainable cost structures and week revenue performance. Management are in the process of engaging the West African Sun Hotels Limited, Nigeria with a view to exit by 30 September 2015.”
The appointment of Legacy Group of Hotels will see guests now able to enjoy a complete holiday experience in Zimbabwe – white water rafting; boat trips on the river; helicopter flips viewing The Falls; guided tours walking lions and elephants; golf on the 18-hole Elephant Hills Golf Course; a future Spa; outdoor sports including mountain biking; gambling and game viewing.
“The 100-room Hwange Safari Lodge will be completely upgraded on a phased basis into a 4-5 Star lodge at affordable prices, including a new waterhole,” says Legacy’s Dorrestein. “The Monomotapa Hotel is planned for a face-lift to all its 240 rooms, with the addition of a new outdoor pool area and additional restaurant facilities. At the famous Troutbeck, it is the intention to retain the unique Scottish Highlands feel and atmosphere, whilst expanding the leisure activities. Once the above projects have been bedded down, we have agreed to expand our vision on Lake Kariba. Zimbabwe is a complete holiday destination in one country, offering a diversity of experiences, an excellent 360 days a year climate with easy access to other Tourism coastal destinations such as Cape Town and the Indian Ocean Islands.”