Companies

Fairview Hotel, City Lodge put on sale amid Covid hit

PANGO

Pango terrace at Fairview Hotel in Nairobi. PHOTO | FILE

Nairobi’s Fairview Hotel, Town Lodge and City Lodge Two Rivers have been put up for sale as the South African hospitality group which owns the three units plans to exit East Africa after barely six years of operation.

City Lodge Hotel Group says it has received an offer from a buyer who is interested in the three hotels in addition to City Lodge Hotel in Dar es Salaam which it also owns.

“Shareholders are advised that following receipt of an unsolicited non-binding offer for the proposed acquisition of City Lodge’s East African operations, comprising of its hotels situated in Kenya and Tanzania, the company has entered into negotiations which, if successfully concluded, may have a material effect on the price of the Company’s securities,” said the firm.

The update was shared at the Johannesburg Stock Exchange where the hotel is listed.

The firm says that occupancy levels have been below expectations at Two Rivers while bookings in the Tanzanian unit have been sluggish, leaving only Fairview with a robust performance.

The firm has not however made a direct reference to sluggish business as the reason for selling the hotels which will now leave its operations in South Africa, Botswana, Namibia and Mozambique.

City Lodge has also not disclosed who the buyers are or the price it is seeking to fetch from the four hotels that have a combined bed capacity of over 320 rooms. The offer comes at a time Covid-19 has ravaged the hospitality industry mainly through hotel closures and booking cancelations, making City Lodge Hotel Group plunge into Sh3.64 billion (R486.6 million) loss—the first in over seven years.

“The 2020 financial year was our most challenging operating year in the group’s 35-year history, mainly due to the lockdown protocols implemented by the South African government, and similar restrictions in the rest of Africa countries in which the group operates,” said Chairman Bulelani Ngcuka.

Average occupancies for the group in the 12 months to end of June, declined from 55 percent in the previous financial year to 38 percent.

City Lodge entered Kenya in 2012 by acquiring Fairview Hotel that is situated opposite the Israeli Embassy in Nairobi.

The group then opened another hotel in Two Rivers mall in early 2018, mainly targeting clients from non-governmental organisations, embassies and other business travelers.

City Lodge then followed up with entry into Tanzania in December 2018 by opening City Lodge Hotel Dar es Salaam, a 148-rooned hotel targeting business travellers and tourists.

The planned exit comes at a time the group has been marketing Fairview more actively to South Africans and positioning it as a first-choice conferencing, events and wedding venue.