HOTEL and leisure group, African Sun Limited is on the verge of acquiring a five star hotel in South Africa in line with its regional expansion.
Speaking to businessdigest on Wednesday this week African Sun chief executive, Shingi Munyeza said the group has secured the new property although he could not disclose the cost and name of the hotel.
“We (African Sun) are not ready to disclose the name of the hotel . . . The new hotel we are acquiring will give us an added dominance in tourism attractive because it is in a precinct wild life sanctuary linked well with Victoria Falls and Hwange, so we are beginning to roll out this programme,” said Munyeza.
Munyeza said the acquisition was in line with expansion which African Sun began last year.
But how was the transaction funded?
“The funding was being done through South Africa as well as using our collateral in Zimbabwe. There is no delusion in the shareholding. It is a leveraged transaction,” he said.
“It is an out right purchase in line with strengthening our balance sheet outside Zimbabwe,” he said.
The expansion is going in line with African Sunâ€™s plans to have a dual listing.
“We are still looking at what will be the most viable market for us to fundraise and unlock value, so we cannot say which stock exchange we are targeting,” said Munyeza.
The glow of African Sun has not waned despite an economic recession and bad publicity on the country, which had slowed down tourist traffic in the tourism industry.
The company boasts a quality portfolio of hotels, resorts, casinos and timeshare operations in Zimbabwe, Mozambique and South Africa.
The group said it will continue expanding its wings with a bias towards West Africa.
“We are migrating our business to hedge against the sensitivity of the industry.
“We are targeting areas in minerals, high growth cities mainly for trade and administration centres for development and tourism attractiveness,” he said.
Munyeza said to date, African Sun had added 540 rooms outside Zimbabwe, which brings the rooms to about 615.
“We are targeting 4 000 rooms by 2012. Our biggest market will be West Africa.
“We intend to roll out more hotels because by the end of next year, we should have 50% of our total rooms in Zimbabwe. After about five years Zimbabwe will have 30% (total hotels rooms),” said Munyeza.
An improvement in the guest mix in favour of foreigners and rooms outside Zimbabwe has improved foreign currency generation for the country.
The buzzword in the hospitality industry at the moment is the 2010 World Cup Soccer showcase in South Africa and African Sun said they had plans to capitalise on the sporting event.
“We are trying to get as much rooms in South Africa ahead of the World Cup to take advantage of 2010. We are hoping we would have opened markets in Lusaka and Gaborone by 2010 as there will be a capacity shortage during the 2010 Soccer World Cup,” Munyeza said.
Following the disposal of the property portfolio, African Sun has emerged as a pure hospitality player. While some may feel that the company is less defensive in the absence of the property portfolio, the group views this as an advantage as it allows it to experience an immediate uplift when economic turnaround finally happens without incurring recapitalisation costs.
By Paul Nyakazeya