Industry Face-Off: Hospitality Property Fund vs African Sun Limited
07. Apr, 2009
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Both companies under review this week are major players in the tourism property industry and both invest heavily in this sector. Check out each one’s credentials and decide who you feel might edge slightly ahead in the voting poll. Bear in mind, though, that we’re looking at their core business practice and not comparing the two companies as such with each other.
Hospitality Property Fund: CEO Gerald Nelson
Who are you?
Hospitality Property Fund is a property loan stock company, which invests in properties in the hotel and leisure industries. The Fund is a publicly traded company and is listed on the JSE under the ‘Financials – Real Estate’ sector.
How big is your portfolio?
Hospitality’s portfolio consists of investments in 23 hotel and resort properties.
Core function?
The Fund was established with the aim of offering unit holders an investment vehicle with exposure to the hospitality sector through the ownership of hotel and leisure properties. Both the property and hotel and leisure sectors have recorded sustained growth of late and the prospects for these sectors continue to be positive.
The Fund consists of investments in 23 hotel and resort properties in South Africa, and is highly diversified in terms of geographic location, star grading, fixed and variable income, and market mix. The properties were independently valued at R2,73 billion.
The Fund’s earnings are distributed in full, as debenture interest, free of tax and linked unit holders consequently are subject to tax according to their individual tax status.
How many properties are you associated with and where are they?
The Fund’s property portfolio consists of interests in 23 hotel and resort properties in South Africa. The properties can be categorised into three lease segments, namely; fixed lease properties, C-Corp lease properties and variable lease properties.
The fixed lease segment includes interests in six properties, which accounted for 53% of total rental income for the year ended 30 June 2008. These properties comprise the Birchwood Executive Hotel and Conference Centre, Champagne Sports Resort, Kopanong Hotel and Conference Centre, Park Inn Greenmarket Square, Premier Hotel King David, and the Radisson Hotel Waterfront. Rentals under fixed lease agreements are determined by contractual lease terms with inflation-linked escalations. The lease on the Birchwood Executive Hotel and Conference Centre further includes a turnover rental component.
C-Corp lease properties are: The Bayshore Inn, The Imperial Hotel, Mount Grace Country House & Spa, Protea Hotel Marine, Protea Hotel Richards Bay, Protea Hotel Victoria Junction, The Hazyview Hotel, Hluhluwe Hotel & Safaris, The Richards Hotel, The Rosebank Hotel and The Winkler Hotel.
The variables lease category comprises interests in five Courtyard Hotels, situated in Arcadia, Cape Town, Eastgate, Rosebank, and Sandton. City Lodge Hotels Limited is both tenant and manager for these hotels.
New developments?
Hospitality has committed significant funds to expanding, redeveloping, and refurbishing a number of properties in the portfolio to strategically position these for maximum long-term growth. The combined capital value of these projects is approximately R500 million, the majority of which will be completed during the coming financial year.
The redevelopment of The Rosebank has been completed at an approximate cost of R314 million. It is expected that the works at the Mount Grace Country House and Spa will completed towards the end of the financial year with the budgeted cost of R140 million. Refurbishments at the three properties in Richards Bay and The Winkler hotel are on track and are anticipated to be completed during the course of the second half of this financial year.
African Sun Limited: CEO Shingi Munyeza
Who are you?
African Sun manages select hotels, casinos, and resorts in prime tourist destinations and major cities. World renowned hotels, The Grace In Rosebank, South Africa, The Victoria Falls Hotel and Obudu Mountain Resort, Nigeria are part of its portfolio.
How big is your portfolio?
In excess of 18 major hotels.
Core function?
Through a clearly defined strategy for expansion into high growth African markets, African Sun intends to grow its current 2,500 rooms under management to 8,500 rooms by 2012. This will be achieved through acquisition of long-term lease arrangements, management contracts, and partnerships with property developers in a manner that maximises efficiencies and minimises operational risk.
African Sun has re-defined its business to encompassing all aspects of the tourism chain to provide a holistic hospitality and leisure product meeting and exceeding the needs and expectations of guests. This responsive ethos has been extended to our investors and we are proud to launch AfricanSunInvestor.com.
How many properties are you associated with and where are they?
The Zimbabwe operations portfolio currently comprises 13 hotels and resorts across the nation including three resort hotels in the town of Victoria Falls, namely Elephant Hills Resort, The Kingdom at Victoria Falls and The Victoria Falls Hotel, jointly managed with Kingdom Meikles Africa Limited. Close to the resort town of Victoria Falls in Hwange is African Sun’s safari operation, Hwange Safari Lodge.
The Eastern region’s city hotels include five Intercontinental Hotels Group (IHG) affiliated brands, the Crowne Plaza Monomotapa, and the four Holiday Inn branded hotels in Harare, Bulawayo, and Mutare, and the Express By Holiday Inn Beitbridge. In addition to these, the Group also operates the Great Zimbabwe Hotel in Masvingo, which is located within walking distance from the National Monument (Zimbabwe Ruins). The three resorts in the Eastern Region are Troutbeck Resort in Nyanga, and Caribbea Bay Resort located in Kariba. Fothergill Island, a safari lodge, is also located in Kariba.
In South Africa operations are made up of The Grace in Rosebank, and the Lakes Hotel & Conference Centre in Benoni, both in Johannesburg. In Nigeria, the Group operates under management contract Obudu Mountain Resort, Utanga Lodge, and Amber Tinapa in Cross River State, Nike Lake Resort in Enugu State and a specialised Spa hotel in Lagos called Clear Essence California Wellness Centre and Boutique Hotel. In Ghana, there is Holiday Inn Accra Airport.
Also under its wing, African Sun Limited holds an 18.96% equity interest in Dawn Properties Limited, an investment property holding company formed and listed on the Zimbabwe Stock Exchange in 2003 when the Group spun-off wholly owned property interests; retaining the hotel management business. Dawn Properties owns nine of the properties that African Sun leases and operates in Zimbabwe.
New developments?
Right now, we are focusing a lot on the 201 World Cup. We are trying to get as many rooms as possible 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.
Please feel free to suggest any industry players or leaders in their field to be included in our Industry Face-Off.
My name is Muzi Mohale a full-time travel blogger, your host at Travelwires.com responsible for all editorial on this blog. I blog about the travel and tourism industry in Africa. Apart from blogging about tourism, I also run 
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