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TSOGO SUN’S R220 MILLION INVESTMENT INTO DURBAN’S GOLDEN MILE: MACEL VON AULOCK- CEO, TSOGO SUN

A really key story about urban rejuvenation in Durban.’
– DOWNLOAD THIS INTERVIEW

GUGULETHU MFUPHI: Today we turn to some good news that some holidaymakers might be keen on. This comes after luxury accommodation group Tsogo Sun looks to invest close to R220m in refurbishing and launching several of its hotels across the Durban promenade. Now, these hotels include the likes of the Southern Sun Elangeni, North Beach hotels into one single complex, which will be larger and obviously relaunched in the months to come.
But on the line to detail this is Tsogo Sun’s chief executive Marcel von Aulock. Marcel, thanks for joining us. The R220m into relaunching and refurbishing already existing hotels – what brought this about?

MARCEL VON AULOCK: The major driver was the very good work that the city did on rejuvenating the Durban beachfront – probably one of the legacy projects from the World Cup. They spent I think nearly in total R500m on fixing up the promenade that runs .. from uShaka down in the south right up past the Suncoast Casino past the Moses Mabhida Stadium. And the rejuvenation work they did has just lifted the whole standard of the environment – a real urban renewal story.
And that gave us the confidence to look at some of the assets there. We’ve got significant assets along that Golden Mile strip, about 1700 hotel rooms plus the Suncoast Casino. And with that improved environment we said we can do something more special than just a simple hotel refurbishment with the Elangeni and the North Beach Hotels.
And so we took a decision to complex these hotels and create a destination complex pretty much like it was in years gone by, with multiple restaurant offerings, multiple entertainment, multiple eventing, etc.

GUGULETHU MFUPHI: Marcel, you mention that there will be several significant changes there. You’ve mentioned the restaurants and entertainment centres. Will the consumers eventually be feeling the impact of this investment in their pockets?

MARCEL VON AULOCK: The market will determine how the pricing of the hotels works as the market improves. We obviously get yielding opportunities as the market declined, [putting] consumers in a great position and pricing is weak.
But this is really driven from offering a better product in an area that warrants a really good product now, and in particular with what we call “business tourism” – so corporate meeting incentives, the events, etc, where you get a large variety of offerings within one hotel destination as opposed to just booking rooms and then trying to find different facilities for your event.

GUGULETHU MFUPHI: I understand that this will be taking place through various stages, so could you walk us through the process?

MARCEL VON AULOCK: Ja, the initial stages which we started last year, actually, were the refurbishment of the North Beach hotel, which we are going to rename the Maharani Tower, which is a well-known name in Durban. That was the first phase where we had to completely gut and refresh all the bedrooms. We’ve done the public areas, we are doing the meeting/conference areas in that hotel.

In the Elangeni area we have relaunched to pool deck, which has got a whole new Ocean Breeze Restaurant coming in. We are working on the conference basis. That, together with a sense of look-and-feel and a sense of arrival to the complex has been phase one.
We also included in that repainting our buildings, redoing the facades, including the Maluti residential apartments in between, so that you get a whole better access and flow into the building.
The second phases will be introducing a spa, and we are going to reopen the famous Raffles area on top of the Maharani building, which we are turning into a multipurpose venue that can be used for everything from nightclub events through to sports teams, meeting rooms, etc. And the final phase will be the refurbishment of the Elangeni room block.

GUGULETHU MFUPHI: Any plans to invest in other hotels across the country?

MARCEL VON AULOCK: Ja, we’ve got a continuous progamme going. As a group we spend about R700m a year on that in capex. We operate 95 hotels. It’s a programme that continues. The real excitement for us in this particular project is the scale. It’s a 734-room hotel complex which, by any global measure, is a significant hotel destination in any city. And it’s a really key story about urban rejuvenation in Durban.
I think a lot of people still have a perception of Durban being a run-down, degraded beachfront and when you’ve actually been there and seen it, it’s a remarkable improvement and credit for that has really got to go to the city.

GUGULETHU MFUPHI: Marcel, as we close off, could we see any spin-off effects from this investment, such as job creation in that particular region?

MARCEL VON AULOCK: A lot of it is job maintenance. If you get urban decay that’s when you lose city areas, and if Durban lost the beachfront they would have lost the city. That causes job decline. In this case it’s refurbishing and building up. There’s obviously a lot of building-work jobs that can insert. It’s not a new facility that comes in. The new restaurants and so on will have additional employees, but it’s a maintenance job as much as creating future jobs.

Source: Moneyweb