Johannesburg - Hamza Farooqui, founder of South Africa's first Sharia (Islamic law)-compliant unit trust, has set his sights on the hospitality industry with the opening of the country's first dry five-star hotel.
The Coral International in Cape Town will be the first of about 20 new hotels planned by Farooqui's Cii Holdings which also has interests in broadcasting, retail, property and Islamic financial services.
"We're not hoteliers, but property developers. We saw a piece of land and an entrepreneurial gap," said Farooqui. The R300m hotel development is located in the Bo-Kaap, Cape Town's traditional Muslim area or so-called Malay Quarter, which traces its history back to the 1700s. The neighbourhood did not fall victim to the apartheid regime's policy of forced removals.
The new hotel will be managed by Coral Hotels & Resorts, part of Dubai-based hospitality group Hospitality Management Holdings. The Development Bank and Absa were the project's major financiers.
Farooqui said Cii Holdings structures Sharia-compliant deals - meaning no interest can be charged on lending - whenever possible. The financiers make their money from professional fees and a profit-sharing system.
"The equity part of the hotel deal followed Islamic principles, but it is not always possible to structure debt this way," said Farooqui.
He said there is renewed interest in Islamic financial services in the banking world, because in many ways they offer a more conservative approach which minimises risk and is appealing in a recessionary environment.
"We managed to close the deal in 2008 already. That was before the global economic cookie crumbled. We're a prudent company and I'm very sceptical of cost overruns. We've been able to complete the Cape Town Coral International project on time and on budget," said Farooqui.
Islamic radio and TV also on menu
It's Cii's first venture in the hotel and hospitality industry, and Farooqui said the company is looking at opening up another 20 hotels in the region over the next five years.
"Over the last few weeks, we've been approached by a number of brand name global hotel groups about possible deals. It speaks volumes." Farooqui said many early bookings have come from the corporate market, and the split between local and foreign visitors is about 50-50.
Apart from finance and property, Cii's other interests include an Islamic radio station and satellite television channel, as well as retail operations in Lenasia, Gauteng among other spots.
The Sharia-based Futuregrowth Albaraka Equity Fund established by Farooqui has R1bn of assets under management and is a joint venture with Old Mutual. Farooqui's first foray into business was as a young teenager, when he set up the iCricketer.com website to indulge his passion for the sport.
As for the fact that the hotel does not serve alcohol, Farooqui said the group is definitely not regimental about it. "Restaurants and bars can be found a couple of blocks away in the city bowl. We're focusing on the needs of the business traveller and provide a mix of Arabian and South African hospitality. It's not really an issue."
The hotel was opened by Minister in the Presidency Trevor Manuel, who joked afterwards that everybody is welcome through the doors of the hotel, except Charles Glass or Johnny Walker.
- Fin24.com