African Sun plans US$60 million expansion


Crown Plaza Hotel

AFRICAN  Sun Limited has introduced a new business model that will see Legacy Group of hotels managing five of the group’s flagship hotels in the country.

The agreement between the two parties provides for the management, refurbishment and expansion of the group’s strategic assets at a minimum cost of US$60 million over the next two years.

The hotels under the management contract are the Elephant Hills, the Kingdom Hotel, Hwange Safari lodge, the Monomotapa Hotel and Troutbeck, with future expansion of Caribbea Bay and Fothrgill Island in the pipeline.

Announcing the new business model on Friday, Afsun Chairman Herbet Nkala said the group will globalise by contracting international hotel management companies to manage selected hotels in the group. He said the company approached six international management firms before settling on Legacy.

Nkala said the new look Afsun will have three strategic business units, namely the Legacy group SBU, the International Hotels Group (IHG) SBU which retained its right to continue with the franchising structure with respect to the Holiday Inn chain of hotels, including the soon to be rebranded Holiday Inn Mutare.

The remaining hotels made up of Victoria Falls Hotel, Carribea Bay resorts, Great Zimbabwe hotel Beitbridge express hotel will continue under Afsun management while their future is determined.

He said Afsun has also started restructuring internally which will result in massive annual savings

“Bringing the Legacy of Africa’s leading Hotel and Lifestyle Group into Zimbabwe will be a major boost for Tourism in our country. Today we announce the roadmap that will steer the company to greater heights through our new hotel investment model. Our head office head count has reduced from 42 to 12, making savings of us$4,5 million a year Furthermore our debt has been reduced from $22mln to US$9,8 million as of 31st August,” he said.

He said the board also decided to disinvest from all regional operations which has seen the group exiting from the Amber Hotel in Accra Ghana, while management is engaged in the exiting of the West African Sun hotels by end of this month. The disinvestment will result in saving of US$10 million per annum which be concentrated back into Zimbabwean operations.

The 100-room Hwange Safari Lodge under the new arrangement will be completely upgraded on a phased basis into a 4-5 Star lodge at affordable price including a new water hole.

The Monopotapa Hotel is planned for a face-lift to all 240 rooms with the addition of new outdoor pool area and additional restaurant facilities. At the famous Troutbeck, it is intended to retain the unique Scottish Highlands feel and atmosphere, whilst expanding leisure activities.

Once the above projects have been bedded down, Legacy plans to expand the Afsun vision to Kariba.
Speaking at the same podium, Chairman of the Legacy group, Bart Dorrestein hailed Zimbabwe as a complete holiday destination offering a diversity of experiences. He said Legacy will lure tourists from South Africa and ensure tourists stay in the country for longer periods.

“With the weakening of the South African Rand and most African currencies, re-energizing the Southern African and Africa tourist markets is going to be one of the key focuses in the partnership’s growth plan,” he said.

Speaking at the same podium, Finance minister, Patrick Chinamasa said he looks forward to the day when the tourism sector will contribute 20 percent to 30 percent to the GDP from the current 10 percent.

He said cabinet has since decided to transform Victoria Falls into a special Tourism economic zone with 300ha of land already designated to the ministry of Tourism for this purpose. He said another project in the pipeline is a government initiative involving the construction of a hotel and hospital in partnership with an Indian company that specialises in health tourism.

He said completion of the Vic Falls international airport is expected soon with more airlines expected to resume flights into the country. He said the resurgence of interest in the country’s airspace which has seen 18 airlines now flying to Zimbabwe is an indication that the economy is improving.

Since dollarization, Afsun has not declared any dividend to the shareholders and in addition has accumulated losses in excess of $20mln due to a poor business model and unprofitable regional investment decisions.

The group announced Eddie Shangwa as the substantive MD. -FinX