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Cape Town prepares for the World Cup; Hotel Market
Not Just Reliant on the Existing Operators
By Patrick Goff, April 23, 2007

Rather like the UK, the preparations for the World Cup in Cape Town are being marked by bickering, protest and court cases. The building of a new stadium is the major cause of debate, but also causing problems are the demands of FIFA for the booking of rooms by organised parties of fans, and by the need for suitable accommodation for the millionaires that make up football teams these days.

The World Cup is seen by the UN World Tourist Organisation as an opportunity to showcase South Africa under the slogan ‘Win in Africa with Africa’. UNWTO’s Francesco Frangialli said: “the world cup constitutes an opportunity that the countries of the region can seize in order to obtain the maximum socio-economic, promotional and cultural benefits. It should also contribute to the strengthening of the image of Africa”

UNWTO sees the World Cup as a catalyst for the growth of tourism in Southern Africa. The beauty of this part of the world and the abundant nature of the attractions on offer take it far beyond the normal tourist attractions. With everything from a luxurious steam train running between Cape Town and Dar es Salaam in Tanzania, Game Parks, Nature Reserves, Bird Reserves, Air Museums where Lightning’s and Buccaneer’s still fly, Marine Conservation Parks (some of the first in the world are here) and surfing beaches on both Atlantic and Indian Oceans this is a destination that is destined to grow from its current million tourists a year to many more. In this year alone the number of visitors from the UK and the USA has increased drastically, and a new agreement has been signed with China to allow more tourists from that country.

In recent years the Cape Town harbour has been extensively developed and amongst new developments planned for the Waterfront are a new Sol Kerzner ‘One and Only’ hotel and casino, and according to the local tourist office over 5 new five star hotels.

Pressure is on to develop more hotel accommodation as with approximately 100,000 rooms available in the Cape Town area, including bed and breakfast establishments, there are barely enough spaces available to meet the needs of FIFA, never mind the normal holiday and business traffic. Existing hotels are adding bedrooms, as are some of the B&B’s, but major investment is needed to create the additional bedrooms, especially at the budget level, that the World Cup demands.

The Cape Town Hotel market is not just reliant on the existing operators. Local company Golding Hotel Investment Consultants says that the Western Cape market in particular is “competing with other prime global destinations such as the Bahamas, Costa Rica and Malta” for private investment funds into small hotels and spa’s. Whilst the Cape is attractive the business market is centred on Gauteng and Johannesburg, and is also attracting the international investors.

Hotel Groups such as Accor expressed their interest in the market when asked recently by Hotel Designs.  The group confirms that it has new projects in the pipeline and confirms its interest in a country “that has huge potential” says communications Director for Middle East and Africa, Francoise Parguel.

For Hilton the interest is also strong but they are looking for contracts on a shared income management contract where they share a percentage of the income with local owners. This model now extensively used in Western Europe is something that is less familiar in the African markets.

With Southern Sun, the previous franchisee for Holiday Inns, rebranding the hotels under their own banner, Intercontinental is also looking for opportunities to extend their various brands (Express by HI, Holiday Inns, Crowne Plaza and InterContinental) into the ‘sub-Saharan market’ market, including South Africa. Rumoured to be bringing all their brands to the country, the group is anxious to capitalise on the previous high profile the Holiday Inn brand has had in South Africa, and is shortly to open a new Holiday Inn in Soweto.
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Cellars Hohenort illustrates a typical Cape Town five star, 
with 54 rooms/suites which is wondering what impact catering to
football fans will have on its business. It is apparently designated
as a hotel to host one of the teams.
Cellars Hohenort
93 Brommersvlei Road, Constantia
Cape Town 7800, South Africa 
http://www.cellars-hohenort.com/

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Another leading South African brand, 9,000 bed Protea Hotels, named after a native plant from the region, has recently been the subject of a takeover by Stella Group from Australia. The group also has a significant shareholding in the European operator Golden Tulip Hospitality Group. Protea, with 126 hotels in 13 countries is Africa’s largest hotel management company.

With the planned addition of Sol Kerzner’s brand ‘One and Only’ to the Waterfront development in Cape Town, only the lack of availability of suitable sites seems to be holding back a major boom in the development of new hotels.

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Contact:

Patrick Goff
patrick.goff@ntlworld.com
www.hoteldesigns.net

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Also See: South Africa Hotels Desperate to Demonstrate Unrivalled Value for Money / December 2004
Cape Town or Sydney Hotels – Which Provide the Best Value for Money? / Aug 2003

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