“There’s not enough room at the Inn.” That’s according to Guy Stehlik, CEO of South African-based hotel management company BON Hotels.
Speaking at the recent THINC Africa Hotel Investment Conference in Cape Town, Stehlik said that there are approximately 78 hotel management groups In Southern Africa operating approximately 984 Hotels & Lodges. “Of the 78 companies, only 12 have a footprint of 8 or more hotels. To make matters worse, the 4 largest operators, City Lodge, Marriott, Tsogo and Sun International operate just over half the 984 properties themselves.”
South Africa’s local hotel industry has become threatened over the last decade with the entry of international players. As we see more international groups vying for position on SA turf, buying business, offering cash injections, discounted fees and shorter-term agreements, Stehlik believes that local hotel management companies are under siege.
“International hotel groups are buying out local groups through mergers and acquisitions. Local operators are all fighting for a diminishing share of management contracts, franchise agreements, representation agreements, and new hotel projects.
Stehlik’s solution is for companies to set their egos aside and consolidate: “Imagine if just 30 of the 78 Hotel Groups joined forces into an alliance partnership and consolidated into one powerful hotel management company, similar to what travel consortia got right many years ago.” He believes that consolidation would improve buying power, BBBEE status, spending power, increase footprint and offer more diversity of product.
International hotel groups have strong ambitions of growing their South African and African portfolios and consolidation would mean that a local operator could not only be a stronger contender but, more importantly, be supporting our own country: buying local, growing local, employing local, supporting local and facilitating the transformation vision.
“We need to save our local industry and stand together, merging our companies, our expertise and especially our local advantage, forming a strong South African brand once again. We can only take back our industry by becoming a part of this new ‘sharing economy’,” concluded Stehlik.