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Oliver Kazunga
Senior Business Reporter
Victoria Falls, the hub of Zimbabwe’s tourism industry, is set to have two new upmarket hotels constructed in the resort town at a combined cost of US$114,3 million.
According to the Zimbabwe Investment and Development Agency (ZIDA), the projects entails the development of a US$49 million four-star hotel and a US$65,3 million five-star hotel.
The four-star hotel and conference centre will be the first to commence under the proposed Mosi oa Tunya Hospitality Real Estate Investment Trust (REIT) to be listed on the Victoria Falls Stock Exchange (VFEX).
The proposed Victoria Falls Resort & Spa will be a five-star hotel, to be constructed under a Public-Private Partnership (PPP) arrangement between Victoria Falls City and Lamcent Capital, a private entity registered in Zimbabwe.
In its latest World Tourism Market investment prospectus, ZIDA said construction of the four-star hotel will begin after financial closure, which is expected to be reached before the end of this year.
This would pave the way for the development of the hotel on a 5,61-hectare piece of land.
The property will comprise 180 rooms, 114 standard rooms and 60 executive suites, six twin suites, 100 pax conference rooms, two deluxe restaurants, infinity pool, spa, gym, boma and a wildlife watering hole, planned for completion at the end of 2026.
“The hotel will be developed at a cost of US$49 million of which US$25 million (51 percent) has already been raised and over US$7 million has already been disbursed.
“Promoters of the project are in the market to raise the remaining US$24 million through equity and debt financing,” said ZIDA.
It said the project will generate revenue from leasing the hotel under a management contract with Cresta Hotels, with projected return on investment being an internal rate of return (IRR) of 16,3 percent.
“In summary, the project has a compelling investment proposition based on; excellent location in the tourism paradise of Victoria Falls; liquid investment, investors have the option to exit their equity holding via REIT units which will be listed on the VFEX. A reputable and experienced hotel operator, Cresta Hotels, will brand and operate the hotel on renewable 10-year lease basis.”
In terms of the US$65,3 million Victoria Falls Resort & Spa, ZIDA said the property, which will have 160 rooms, was a greenfield project. To date, a project feasibility assessment has been undertaken, a PPP agreement signed, with a 500-year concession period, and a hotel management contract with one of the recognised names in the hospitality industry already in place.
“The project promoters have put in US$6,8 million and are in the market for US$56 million as debt and/or equity to be used to construct the hotel. The project has attractive returns, which will be generated from hotel operations, as follows: payback period of 12 years — IRR of 12,4 percent — and NPV (net present value) of US$13,6 million,” the agency said.
This, ZIDA said, was an excellent investment due to the fact Victoria Falls was a national heritage site and one of the seven natural wonders of the world and thus becoming the most visited tourist attraction site in Zimbabwe.
Victoria Falls, ZIDA said, lacked fresh upmarket accommodation and had a general shortage of hotel rooms to reach full potential.
“The hotel (Victoria Falls Resort & Spa) is located close to the Zambezi River with river frontage. This will become one of the five-star hotels in Victoria Falls and the only one with a recent build. Its closest competition is the Radisson Blu Hotel across the river in Livingstone, Zambia. The Victoria Falls Resort & Spa will be managed by a renowned global brand in the hospitality industry,” said ZIDA.
It said the project, which has Cabinet approval, would see the investors sitting on the board and having a say in the company’s strategy formulation and execution.
“The hotel will be managed by an independent international hotel brand operator — the investment has been awarded a prescribed asset status by IPEC (Insurance and Pensions Commission), making it attractive to pension funds.
“Guarantees have also come from the project promoters that they will buy up to 25 percent of investors’ equity upon exit,” said the agency.
Tourism is one of Zimbabwe’s fastest growing and strategic key sectors expected to drive the country’s economic turnaround.
In this context, the Government has made significant strides in the implementation of the National Tourism Recover and Growth Strategy that seeks to grow the tourism economy to US$5 billion by next year. The National Tourism Recovery and Growth Strategy is anchored on Zimbabwe’s vision to be a prime international tourist destination based on the judicious and sustainable exploitation of the unique assets of nature, culture, heritage and the built environment.