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Meikles transaction: FDIs in motion

27 Nov, 2019 - 00:11 0 Views
Meikles transaction: FDIs in motion

The Herald

Fradreck Gorwe Business Reporter
The ongoing transaction to dispose of Meikles Hotel for US$20 million to ASB Hospitality — a Zimbabwean investment vehicle owned by a Dubai-based company Albwardy — is testimony that Zimbabwe is a favourable investment destination with great potential.

Meikles Hospitality is selling the facility due to its inability to raise US$30 million needed to upgrade the hotel to a five-star hotel.

The pending investment by Albwardy comes at a time Government is concerned with the country’s hotel room stock which it says projections show would be over 2 000 rooms short by end of 2020 thus curtailing the growth of the tourism sector.

In a circular to shareholders, company secretary Thabani Mpofu said the hotel now requires substantial modernisation of guest facilities as well as electro mechanical and plumbing infrastructure to restore it “to a five-star property by international standards”.

“After close to two decades operating at low room occupancy (below 50 percent), hotel refurbishment and back of house services have fallen far behind the requirements of a five-star hospitality offering,” said Mr Mpofu.

He said initial estimates indicate that up to US$30 million is required to bring Meikles Hotel “to a five-star property by international standards”.

Investment analysts said the owner of Albwardy Investments and ASB Hospitality, a Dubai magnet —Ali Albwardy — doubtlessly made informed decisions prior to the proposed purchase of Meikles Hotel considering that he is an experienced businessman.

Albwardy Investments has an annual turnover of over US$1 billion, while it operates a diversified portfolio of hospitality and hotel ownership, food retailing, food distribution, engineering, and construction.

Commenting on the valuations made as well as the disposal’s implications on the hotel upgrade and the Zimbabwean hospitality industry in general, realtor Simba James said the US$20 million purchase price is worth it considering the work to be undertaken by the investor to upgrade the hotel to international standards.

“The general valuation made on the building is fair putting into consideration the amount of work that the new investor will need to put in to bring the building back to its five-star status.

“Some may feel this figure is understated but a lot of factors were considered for the parties involved to agree on this valuation. There has been a figure of US$30 million mentioned, which shows the extent of the scope and extent of the renovations,” said Mr James.

At a time most corporates tend to blame mild financial performances on perceived volatility of the operating environment, it is ironic that the disposal is not a sign of failure in the hospitality space but a sign of progression.

The disposal is in fact a sign that the Zimbabwean hospitality industry has opened doors for foreign direct investors given the deficit of new modern hotels.

Said Mr James: “The disposal does show that there is a lot of potential in the Zimbabwean hospitality space. There is a deficit of new modern hotels, which offer huge opportunities for investors. The preferred destinations like Victoria Falls, Kariba, Harare, Nyanga and others will be areas likely to benefit from such investment types.”

Suggestions were made that Zimbabwean hospitality service providers should embrace a differentiated marketing mix, which in turn pushes for the creation of varied revenue streams for hotels. It is also deemed ideal to provide tourists with unique African experiences to grow arrivals.

“The whole business model and offering will require a relook so as to cater for different customer types. Categories include hotel apartments, serviced apartments, self-service apartments and self-catering, lodges and

boutique hotels.

“As an investment destination we have a lot to offer.  We need a way to really capture international tourists. Retail and theme parks can contribute to that together with unique African experiences.

“Entities like the Zimbabwe Tourism Authority (ZTA) and the Zimbabwe Investment Authority (ZIA) will need to come up with plans that ensure the right kind of investors are attracted to the industry,” suggested Mr James.

Meanwhile, the new president of the Hospitality Association of Zimbabwe (HAZ), Clive Chinwada, spelt out his vision with regard to growing the hospitality industry.

Mr Chinwada said he would like to “help facilitating positive engagement between Government and the private sector, in this specific instance hospitality players in order to ensure the creation of an environment that moves Zimbabwe up the tourism competitiveness ladder”.

‘’I hope that during my tenure as HAZ President, Zimbabwe’s tourism competitiveness ranking will improve as Government and the players engage more and come up with policies that strengthen the competitiveness of our industry,” said Chinwada in emailed responses to this publication.

He also pledged to elevate, escalate and deepen the influence of HAZ as it relates to advocacy and think tanking for the hospitality industry as well as strengthen the association’s institutional capacity, as well as to grow the contribution of tourism and hospitality to the national economy.

“The theme of my time in office in the coming year will be built around three words, words that I believe will add so much meaning to the work that HAZ does, is doing and will continue to do. These words are Elevate, Escalate, and Deepen the voice of our industry.”

He noted that his mandate is driven by the hospitality industry’s contribution to the Zimbabwean economy as well by the targeted contribution of US$6 billion by 2023.

“The contribution of the tourism and hospitality industry to the Zimbabwean economy, which is earmarked for a US$6 billion contribution by 2023 as mentioned by (Government) is worthwhile to put on record,” he said.

According to statistics released by the World Travel Tourism Council (WTTC), hospitality and tourism is globally an US$8,8 trillion industry contributing 10,4 percent of global GDP, employing 319 million people (a ratio 1:10 jobs) and earning US$1,6 trillion in exports.

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