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Business Reporter
On a warm and typically tropical summer Friday afternoon, at one of its more cherished assets, the Crowne Plaza Hotel, African Sun played host to a diverse range of stakeholders to share in its excitement.
Who was there?
As the guest of honour was Finance Minister Patrick Chinamasa. Other extolled guests included Minister of Industry and Commerce Mike Bimha, Harare Mayor Bernard Manyenyeni, and Brainworks Capital chief executive Richard Muirimi.
However, sitting among African Sun management and directors was a distinctively tall figure cloaked in a navy blue jacket.
This gentleman wore a curious pair of spectacles made of detachable lens easy to put on and remove; perhaps indicative of a man meticulous about detail? One could sense that he was pivotal to the excitement and buzz that grew more infectious as everybody took their seats ready for the event to get under way.
African Sun chairman Herbert Nkala kick-started proceedings with customary formalities but wasted no time to give the overview of where the company stood within what concededly is a challenging regional environment for the tourism and catering business.
Consequently, ASL had made the decision to discontinue its Ghanaian operations on August 31, saving an estimated $10 million annually.
This is in line with efforts to focus on consolidating key operations within the region.
Consistent with this strategy, International Hotel Group, would retain rights to franchise Holiday Inn in Harare, Bulawayo and Mutare.
However, what brought various stakeholders to gather in the Great Indaba Hall and was cause of excitement would be expressed in Mr Nkala’s transitory remarks and introduction of the tall gentleman in blue, Mr Bart Dorrestein.
African Sun is entering a management partnership with South African group, Legacy Hotels.
In its interim financial results in March, African Sun had shared intentions of brand evaluation, product repositioning, and service excellence.
This is the move meant to turn intent to reality; a move complimented by a $60 million purse.
The hotels under the management contract are the Elephant Hills, Kingdom Hotel, Hwange Safari Lodge, the Monomotapa Hotel, and Troutbeck.
Mr Dorrestein, a man greatly familiar with the Zimbabwean scenic landscape, opened his address with an impassioned admission to his fondness of the country.
Binding his attachment is the country’s prospective potential, and so he dispensed some of Legacy’s plans to capitalise on that future.
The 100-room Hwange Safari Lodge will be completely upgraded on a phased basis into a 4-5 star lodge. The Monomotapa 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, the hotel will retain its unique Scottish Highlands feel and atmosphere, but Legacy hopes to expand on the leisure activities to be provided.
A gentleman who started off in the construction business, Mr Dorrestein is indeed meticulous about detail.
In a 15-minute slide show, he shared graphic explanation of the aforementioned plans for each hotel, exuding an eagerness to be hands on in his involvement once the projects get under way.
Perhaps this is what African Sun is really looking for. This deal is all about finding a managerial partner of global competitiveness.
Perusing through a selection of pastries as the event wound up, Mr Muirimi casually explained that Brainworks prides itself in finding the best managerial competency to steer its investments.
If that meant looking beyond Zimbabwe’s borders, so be it. While the local African Sun team had shown adequate skill, as reflected by Mr Eddie Shangwa’s appointment as MD, Legacy would provide a boost through complementary managerial synergies.
Mr Dorrestein is a man very familiar with the hotel business. A stand up executive, transparent, and not shy of putting his face to the Legacy brand — in 2011 he was interviewed on CNBC Africa in quite an assured manner to clear up any concerns about Gaddafi’s ownership stake in the Michelangelo Hotel in Johannesburg.
Such an upfront demeanour is exactly why Finance Minister Chinamasa took warmly to the kind of businessman Mr Dorrestein is.
But such confidence has to be validated by the man being good at his craft.
The track record seems solid enough. An executive for over two decades, Mr Dorrestein has been instrumental in the construction of Southern Africa’s most prestigious buildings.
The list includes Sandton Square and the Lost City, an expansion project to Sun City. Like any businessman worth his salt, his career is one with hard lessons too.
While at Stock & Stock, the company faced exchange rate challenges in the late 90s which led to inflated interest rates that shot up costs of key construction projects.
These strains caused a divisional sell-off which would form what Legacy Hotels is today. Since its inception, Legacy has gone onto complete impressive projects such as Michelangelo Hotel, Davinci Hotel & Suites, and the Raphael Penthouse Suites.
The Michelangelo is a member of the “Leading Hotels of The World”.
What does this all mean for African Sun Limited?
There seems to be a strategic shift going on at ASL. The local management will focus on delivering and financial consolidation whilst evidently; there is a conscious shift to outsourcing operational management.
These efforts can also be seen as a significant withdrawal from the strategy pursued by prior ASL management under the guidance of Dr Shingi Munyeza.
Business is all about market share and profit margins. ASL is moving towards an upscale target market.
As Legacy Hotels prides itself as a lifestyle brand, offering a higher quality experience, ASL is betting on a product differentiation strategy.
This is a strategy that the company itself was never able to match in terms of competitiveness. This is reflected by the reduction in average daily rates (ADR) over the years.
Pricing for a high class differentiated product is all dependent on delivery. This is a strategy that will look to be enhanced by Legacy and push up revenue per available room (Rev PAR).
Indeed, concerns of a falling rand and strengthening dollar have some credence with regards to attracting tourists into Zimbabwe.
In management notes from last financial statements, effort will be put into trying to secure foreign arrivals through international trade fairs and marketing projects.
As this is the same target market that Legacy caters to in its South African hotels, Legacy’s experience curve gives some confidence that its refined service competencies and brand recognition will cushion the price hikes.
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