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It's also moving more into Africa.
Among the many triggers that have stimulated changes in the hotel industry include the upcoming 2010 Soccer World Cup, the general improvement in SA's economic climate (and Africa at large) and the increased investment activity in Africa by China.
Another more industry-specific factor was the disbanding in 2005 of a longstanding joint venture between Southern Sun and InterContinental Hotel groups. Southern Sun is wholly owned by Tsogo Sun Holdings, an entity that houses both Southern Sun and Tsogo Sun Gaming. Under their joint venture, Southern Sun ran hotels using many of the InterContinental group's brand assets, in particular the Holiday Inn brands: Crowne Plaza, Holiday Inn Garden Court and Holiday Inn Express. The tie-up initially made sense, in terms of helping the InterContinental group gain market share and representation in SA. However, it later became clear that the capital Southern Sun was generating from the arrangement was being increasingly used to finance direct competition with InterContinental in other markets.
Southern Sun has invested significantly in expanding into Kenya, Zambia, the Seychelles, Tanzania and Mozambique - extending its international portfolio into areas where InterContinental was also operating.
That situation isn't dissimilar to what happened earlier this year when Heineken removed SABMiller's rights to brew and distribute the Amstel lager brand in SA.
Similarly, Southern Sun was asked to relinquish all its InterContinental brand rights, retaining only the Garden Court brand, which it bought from InterContinental and relaunched as a slightly tweaked Garden Court Southern Sun. All other hotels carrying InterContinental's brands were rebranded and two new Southern Sun brands were created to accommodate the change: StayEasy (to replace the Holiday Inn Express, which operated in the low-budget economy hospitality sector) and SunSquare (aimed at the upper tier of economy travellers).
The first SunSquare opened recently at the new Piazza at Montecasino, north of Johannesburg, near InterContinental's luxury Palazzo Hotel.
Having created its own brands for all its various hospitality segments, Southern Sun has set it sights on becoming "Africa's best hotel group, by recognisable measure" according to the words used in its own vision statement, as it continues its expansion into Africa, the Indian Ocean region and the Middle East.
Southern Sun claims to be southern Africa's leading hotel group, offering the widest distribution of hotels in SA's major centres and key leisure destinations. However, the Protea Hotel group - which includes its African Pride Collection of top-end five-star hotels, country estates and game lodges - claims to be Africa's largest and leading hotel group.
Southern Sun has a portfolio of 76 hotels, including its Formula 1 chain. Protea has 133 hotels in 12 countries throughout Africa - a momentous achievement for a company that started with four hotels in July 1984. In preparation for the onslaught from other groups, Protea Hotels is marketing itself aggressively in various ways: it's identified appropriate target markets and offered free, six-month membership to its ProKard loyalty programme and is now a key partner in Momentum's new Multiply loyalty programme.
The stage is now set for hotel wars between Protea, City Lodge, InterContinental and Southern Sun in SA's urban areas. InterContinental is already building a Holiday Inn Resort on Rivonia Road, north of Johannesburg, in the same street as the Grayston Sun, formerly a Crowne Plaza hotel.
Competing fiercely with Tsogo Sun's gaming outlets on the casino and resorts side, is Sun International, which accounts for 44% of SA's gambling revenues countrywide. Sun International has 20 major resorts, some with more than one hotel, and gaming licences in eight of SA's nine provinces. But the group has only a small presence outside SA, in Namibia, Botswana and Zambia.
InterContinental has more than 140 hotels and resorts worldwide under various brands. In Africa and the Middle East, where it'll most likely compete head to head with SA hotel groups, it has hotels in Zambia, Zimbabwe, Mozambique, Egypt, Kenya, Gabon and SA.
Through its 26% stake in IsoLeisure, Amabubesi Investments has acquired exclusive rights from InterContinental to run the Holiday Express brand in SA. Given the years of hospitality expertise of one of the group's key founders and directors - Thabiso Tlelai, CEO of the Don Suite Group - Amabubesi looks set to make a significant impact on SA's budget-conscious sector.
"The lower end of the market is actually the fastest growing segment in the industry. We'll be competing directly with the likes of City Lodge, which has a well-entrenched dominance in this space with its Town Lodge and Road Lodge brands, as well as Southern Sun's Formula 1 chain," says Amabubesi Investments CEO Sango Ntsaluba.
The City Lodge group's brand assets include the Courtyard (which aims to cater for higher-end clientele), City Lodge (which sits in the middle segment) and its Road and Town Lodges (providing for low-budget travellers).
