Saturday, February 21, 2009

Rezidor pushes hotel expansion

By Roy Cokayne, Business Report

The Rezidor Hotel Group is pushing ahead with its aggressive expansion strategy in spite of the financial crisis.

The group opened its third local hotel in Sandton this week and plans to have 10 hotels in the country by 2013 and 50 in Africa by 2015.

President and chief executive Kurt Ritter said yesterday that the Stockholm Stock Exchange-listed group had been affected by the financial crisis, but for the time being it would continue opening one hotel a week in Europe, the Middle East or Africa.

But Ritter admitted that he did not know how long the group would be able to maintain this pace of growth.

"We have about 90 projects in the pipeline and we cautiously say that 10 percent to 15 percent will not be realised because of the crisis," he said. "We see owners who were not the right owners to begin with and didn't put in enough of their own equity and got everything from banks. They are in deep waters now.

"With this crisis there is light at the end of the tunnel, but the question is, how long is the tunnel?"

The group operates the Radisson Waterfront Hotel, Park Inn Greenmarket Square and Radisson Tru Blue in Sandton. Three other hotels are under construction: the 173-room Radisson Port Elizabeth, the 190-room Park Inn in Sandton, opposite the Gautrain station, and the 144-room Radisson Hotel Blaauwberg.

The Radisson in Port Elizabeth is scheduled to open next month and the Park Inn and the Radisson Hotel Blaauwberg will open next year.

Ritter said the Rezidor group planned to announce more hotels in Cape Town, Durban and Gauteng over the next 12 months, under either its Radisson or Park Inn brands.

He believed that the group would add three or four Park Inn hotels and a couple of Radissons to its South African portfolio in the next three to four years.

The group was bringing new hotels in Africa at such speed that it should surpass its target of having 50 hotels on the continent by 2015, Ritter said. Its target for South Africa "should be doable" with all the potential projects it had under negotiation.

He added that compared to Europe and the US, Africa had been largely insulated from the impact of the financial crisis.

The group this week announced the development of two new Radisson Blu hotels, one in Luanda in Angola involving an investment of $80 million (R818 million) and the other a $40 million hotel in Lusaka in Zambia.

Rezidor said it was continuing to pursue the development of hotels in South Africa, Namibia, the Democratic Republic of Congo and Nigeria, as well as the Indian Ocean Islands.

It has tripled its African hotel portfolio in the past two years through the investment of more than $80 million in the addition of 18 hotels.

It has 25 hotels and about 6 000 rooms open and under development in 13 countries in Africa and operates five hotel brands, namely Radisson Blu, Park Inn, Hotel Missoni, Regent and Country Inn.