Marcel von Aulock, who will lead the new Tsogo Hotels – the largest hotel group in the country and set to list on the JSE next month – sees Airbnb as positive for tourism in SA, but regards international hotel brands as a threat to some local hotel operators. “Would we be sitting at 66% occupancy rather than 62% if Airbnb wasn’t here?” he asked, explaining that Tsogo Hotels does not operate in the same market as someone who wants to rent a place in Sea Point for six people during the summer holiday season. “The international brands are much more of a threat. In their desperation to get distribution they will offer incentives and make unviable hotels viable in the short term.” Government will regulate Airbnb and other home-sharing apps in South Africa, amid growing concerns that they are damaging to the tourism sector.
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Tsogo is being broken into two parts, namely Tsogo Sun Hotels and Tsogo Sun Gaming, which will be listed separately. Tsogo Sun Hotels will include 110 properties across the continent and a 60% interest in JSE-listed Hospitality Property Fund (HPF).
The unbundling would be implemented through a distribution of all the ordinary shares in the hotels business to Tsogo Sun’s shareholders, using the ratio of one Tsogo Sun Hotels share for every Tsogo Sun share held. Former CEO of Tsogo Sun and the new chair of Tsogo Sun Hotels, Marcel von Aulock, said investors were being given a choice; investing in a hotels business which could provide regular income returns or in a gaming business that had a mix of mature casino assets and newer gambling assets.
He said Tsogo Sun Hotels, which would list on June 12, could succeed because of its diverse nature. “This company has a range of businesses within it and this diversification can protect it in down times. We have local hotels which we hold directly, eight African hotels, management businesses and also the 25% of UK hotel group RBL,” said Von Aulock.
He said the group could perform better than its subsidiary, HPF, had in recent years. Tsogo took over HPF in 2016 when the real estate investment trust was struggling in a post 2010 Soccer World Cup lull. Since then new management has been appointed at HPF and the company’s portfolio has been reshaped.
Tsogo Sun provided details about the group unbundling, after it released financial results for the year to March, which it said was a challenging period. Its net profit fell by a quarter during the year because of a decline in property values. “Trading for the year was impacted by the continued pressure on the consumer due to the macroeconomic environment,” the group said.
Profit after tax fell 24.8% to R1.6bn as the hotels business slipped to a loss of R59m because of a R445m reduction in the fair value of its investment properties. Tsogo Sun said total income rose 18% in the year to R11.6bn and operating profit grew 13% to R3.1bn. Income was boosted by a 21% increase in net gaming wins, including the acquisitions of the Galaxy Bingo and VSlots businesses, 4% growth in hotel rooms revenue and a 9% growth in food and beverage revenue.
Published on Friday (12 April), the Tourism Amendment Bill states that ‘short-term home rentals’ will now be legislated under the Tourism Act.
The bill also empowers the minister of Tourism to determine the ‘thresholds’ regarding these short-term home rentals. Speaking to BusinessTech, a spokesperson for the Department of Tourism confirmed that these changes were specifically being introduced to regulate platforms such as Airbnb. He said that the bill also aims to make it clear that this regulation will fall under the ambit of the minister of tourism. “There is currently no other piece of legislation that specifies who is responsible for this regulation,” he said. “We don’t want a situation like with Uber where there is confusion as to who has power to regulate.”
The amendment will also allow the minister to specify ‘thresholds’ when it comes to Airbnbs in South Africa. This could include limits on the number of nights that a guest can stay or even how much income an Airbnb earns, he said. “These thresholds are not about being hard on (Airbnb) owners but making sure that everyone gets their fair share,” he said. “If the guy in the Airbnb gets 13 nights, and the guy next door gets nothing, then he knows that he will get his chance when the Airbnb reaches its threshold.” “Its more about a shared economy rather than trying to regulate a private service,” he said. The spokesperson said that the Department of Tourism also plans to give more oversight to local government when it comes to zoning and where an Airbnb may be located.
‘Killing the tourism industry’
The City Press reports that Airbnb has increasingly come under fire in South Africa. The platform has seen impressive growth in the country, and local hotels are concerned that the unregistered accommodation establishments listed on the platform are taking away business from established bed-and-breakfasts and hotels. The Federated Hospitality Association of SA (Fedhasa) called for government to crack down on Airbnb, and smaller organisations have echoed this call. The Port Elizabeth Metro Bed and Breakfast Association (Pembba) added that Airbnb brought in over R6 million in Nelson Mandela Bay last year, up 65% on the previous period. However, the formal hotel sector only saw an increase of 0.08% in the same area.
https://www.gov.za/sites/default/files/gcis_document/201904/42391gen228.pdf
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Ramaphosa – “emails”behind Mkhwebane’s report
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