Jo’burg listed hotel to buy remaining 50pc of Fairview
What you need to know:
The acquisition will see the South African acquire a 50 per cent stake from City Lodge Hotel Group for undisclosed amount.
The two Nairobi property will be rebranded Town Lodge.
City Lodge Hotel Group will use the Nairobi presence to open more property in the East Africa region including Rwanda, Tanzania and Uganda
Johannesburg-listed City Lodge Hotel Group is set to fully acquire Nairobi-based Fairview Hotel and Country Lodge as the chain expands its presence in Africa.
The acquisition will see the South African acquire a 50 per cent stake from Fairview Hotel Limited for undisclosed amount.
In July 2012, City Lodge acquired half of the Nairobi-based hotels in a joint venture for an estimated Sh1.2 billion, according to the firm’s 2013 Annual Report.
“City Lodge Hotels Limited has reached agreement with Nairobi-based Fairview Hotel Limited to acquire the other 50 per cent of a joint venture between the two companies, giving it full ownership of the Fairview Hotel and the Country Lodge in Kenya’s capital city,” said a statement announcing the acquisition.
“The agreement regarding City Lodge’s acquisition of the other 50 per cent of the joint venture is effective from January 31, 2014.” The deal awaits regulatory approval.
City Lodge Hotel funded the 2012 acquisition partly from debt. The chain notes in the Annual Report that it borrowed the equivalent of Sh560 million for the first Kenya deal.
The two Nairobi property will be rebranded Town Lodge.
City Lodge’s chief executive Clifford Ross said Nairobi hotels recorded good growth since buying a stake in the two units. The 50 per cent stake contributed Sh108 million to the chain’s group profits for the year ended December.
City Lodge booked sales of Sh7.8 billion last year and grew operating profits 13 per cent to Sh2.62 billion.
It will use the Nairobi presence to open more property in the East Africa region including Rwanda, Tanzania and Uganda.
“We have been very pleased with our strategic investment in the Kenyan hotel market and look forward to building on this foothold in the East African region,” he said in the statement while announcing the latest acquisition.
The group has four brands — Courtyard Hotel, Road Lodge, City Lodge and Town Lodge. It has plans to open more hotels in Ghana, Mozambique and Namibia. It set shop in Gaborone, Botswana, last year.
The acquisition by the South African hospitality group comes at a time when international brands are looking to grow their footprint in Kenya. The growth of Nairobi as a regional hub attracting a lot of business travel has led to an increased demand for quality beds.
Two international branded hotels, Villa Rosa Kempinski and Best Western, opened their doors with new properties expected to open in the next two years including the American based chain Radisson and Thailand listed DusitD2.
In 2010, Southern Sun, a South African based hotel chain, acquired Holiday Inn hotel in Nairobi. The move, the first major acquisition by a South African hotel chain, saw the hotel rebranded to Southern Sun Mayfair Nairobi.
City Lodge becomes the recent South African company to make a foray into Kenya. Fashion retailers Foschini and Edgars are set to open stores in Nairobi this year, targeting a growing middle class and the rise of shopping malls in the country.
South Africa retail giant Massmart is also expected to open shop in the country this year.
