Wealthy visitors to be offered a slice of the luxury resorts pie
Some of the most exclusive getaways have joined forces for a listing on
the JSE, writes MARCIA KLEIN
In September, a company comprising several of these resorts will list on the leisure sector of the JSE. The company, called Luxury Resorts and Conferences, includes the well-known Walkersons and Critchley Hackle Lodge near Dullstroom, the Blue Mountain Lodge near Kiepersol in Mpumalanga, the Erinvale Estate Hotel at Somerset West, D'Ouwe Werf in Stellenbosch, St Francis in St Francis Bay, Old Halliwell near Curry's Post, The Lodge at Prince's Grant near Kwa Dakuza in KwaZulu-Natal and a resort marketing and reservations operation, Exclusive Getaways.
All are small, very exclusive country-based resorts in prime destinations catering for the top end of the tourist market.
Over the past year, these individually owned properties have been put together into a group in preparation for a listing. Luxury CE Richard Makin says all are successful, profitable operations. By putting them together, rationalisation and synergistic benefits will enhance all the operations.
About 60% of the company's business comes from overseas tourists, many of whom are loyal, repeat visitors. "Our focus has been on inbound tourism - people who are keen on destinations which are not affected by crime," says Makin, adding that the falling value of the rand also makes these destinations more attractive than ever.
He says the portfolio of resorts and lodges is hand-picked. "We have picked the cream of the crop. We could have increased the portfolio, but we did not want something unwieldy and wanted to first extract the synergies before expanding."
The company, which lists on September 16, will offer 76.8-million shares at an issue price of 100c. There will be a private placing of 60.1-million shares, a preferential offer of 6.7-million and a public offer of 10-million shares. Proceeds will be used to settle the cash component of the acquisition of the hotels, and a portion to eliminate debt so the balance sheet will be ungeared.
This, says Makin, places Luxury at a significant advantage to its city hotel chain competitors which are highly geared.
A portion of the proceeds are earmarked for capex, including conference facilities and increasing the amount of accommodation. Management and staff will be motivated through share incentives.
Conferences form a major focus in the company's strategy.
Weekend occupancies are close to maximum, and conferences will increase midweek occupancy. Luxury Resorts and Conferences has forecast turnover to May 1999 of around R65-million and taxed income of R11.5-million.
The benefits of rationalisation will further enhance earnings, as will acquisitions. "We will make further acquisitions after listing," says Makin, but any new resort must comply with stringent criteria, and Luxury will not buy into turnaround situations. "We are looking at a rapid, but carefully thought-out acquisition drive, and we are also looking at offshore," he adds.
Makin is adamant the company should not be viewed as a hotel group.
"We are positioned well away from the overtraded hotel market. We are not a chain; each lodge is uniquely different. We don't want to be referred to as a hotel group. We are luxury resorts and lodges with our facilities and activities geared to the upper end of the market."
Operations and marketing director Kobus Botha says the rationalisation and synergistic benefits will be profound, particularly in the areas of marketing, central reservations, buying clout and systems.
Financial director Nigel Redford says there will be additional benefits on the financial side, for example, a centralised treasury. "All the resorts have good cash flows, and by pooling them we can get better rates. We will also be dealing at corporate level with banks, whereas before it was at branch level," he says.
He expects Luxury to produce above-average growth.