Protea plans to buy stressed hotels

Johannesburg - Protea Hotels, Africa's largest hotel group, has spent the past six months creating a "multibillion-rand" fund for the acquisition of financially stressed hotels in South Africa, the Business Day reported on Monday.

"There are opportunities in South Africa. We have been looking at a couple of properties. There are a number of hotels that are under stress," CEO Arthur Gillis said.

"Some of these hotels were put together in the heydays with little or no equity during World Cup fever."

Property developers and vanity investors with no hotel experience "other than having stayed in a few" developed hotel properties in the belief that the World Cup would attract large numbers of tourists, he said.

Average hotel occupancy in South Africa in May fell to 50.5% from 53% a year earlier, according to STR Global, a hotel industry trend and data consultancy.

Protea Hotels, which operates 112 hotels across the continent, does "not mind not making money" on a hotel for four to five years while giving it a chance to establish itself.

"We are going to take over a couple of underperforming hotels. We are in a position where a number of properties will come to market and there are not a lot of buyers and we have the appetite," Gillis said.

He estimates there are "upwards of 20" hotels that would fall into this stressed category.