Business / Companies
$135m for Harare hotel
03 Jul 2016 at 11:01hrs | Views
BELGIAN-American hotel group Carlson Rezidor, which is presently on an aggressive expansion drive buoyed by its imminent takeover by Chinese investors, is set to shell out more than US$135 million for a 245-room five-star propety in Harare, it has been learnt.The 56-year-old giant operates 1 400 hotels in more than 115 countries in the Middle East, Europe and Africa.
Its local investment is being promoted by Stream Walk, a business that is controlled by Mr Farai Jere.
Carlson Rezidor owns several brands such as Radisson, Radisson Blu, Radisson Red, Quorvus Collection, Park Inn by Radison, Country Inns & Suites by Carlson and the Club Carlson.
In Zimbabwe its lead brand will be Radisson Blu.
The project has received all regulatory approvals and Stream Walk and Carlson Rezidor are working on an "accelerated design programme".
Physical work will begin "in a few months time" after a groundbreaking ceremony.
It has been established that the mixed-use development that will be located in Eastlea will comprise offices, retail outlets and a hotel offering that will include 40 long-stay residences, a number of food and drink offerings, an all-day restaurant, a specialty restaurant and cocktail lounge, a pool bar and grill, and a large terrace.
Extensive meeting and event spaces are planned, including an Amani Spa and an 800-square metre gym that will be complemented by two swimming pools and a kid's club.
Radison Blu Hotel Harare is set to open its doors to the public in 2019.
In an interview with The Sunday Mail Business, Carlson Rezidor's vice president (business development, Africa and Indian Ocean) Mr Andrew McLachlan said the project had "Presidential Project Status".
"The total investment sum for the mixed-use Stream Walk development is US$135 million. Stream Walk has all approvals in place from EMA (the Environmental Management Agency), to full support from the (Harare City) Council.
"This project has been given 'Presidential Project Status' due to its importance to Zimbabwe . . . We offer the brand infrastructure, systems and support that help any new build (to) become a successful hotel. Our experienced team of technical and hospitality professionals is here to advise our project partners through every stage of each new build property, from preliminary concept to the grand opening, and beyond," said Mr McLachlan.
In a statement released through Carlson Rezidor, Stream Walk MD Mr Farai Jere said construction was likely to begin in March 2017.
"This is the manifestation of a dream which started in 2010. We thank the regulatory and the responsible authorities for facilitating the project, and the investors for supporting this initiative. The fulfilment of our dream would not have come better than partnering a big brand like the Radisson Blu. Our task is now to achieve financial close to enable construction work to commence by March 2017 and complete on time," he said.
Hilton Hotel debacle
Roping in Carlson Rezidor will be a corporate coup for Mr Jere who in 2013 unsuccessfully tried to partner American hotel behemoth Hilton Worldwide to build a facility on the very same land that Radison Blu Hotel Harare will be located.
Initially, the project was expected to start in April 2014, but it is understood that the risk-averse American business was spooked by rival business interests that raised the flag on the santions regime that currently exists against Zimbabwe.
The US congress passed the Zimbabwe Democracy and Economic Recovery Act (Zidera) – which effectively prohibits American businesses from dealing with local companies – in December 2001.
Hilton Hotels is one of the largest brands in the sector, with 4 600 hotels in more than 102 countries. Its premier brand portfolio includes Waldorf Astoria Hotels & Resorts, Conrad Hotels & Resorts, Canopy by Hilton, Curio – A Collection by Hilton, DoubleTree by Hilton, Embassy Suites by Hilton, Hilton Garden Inn, Hampton by Hilton, Tru by Hilton, Homewood Suites by Hilton, Home2 Suites by Hilton and Hilton Grand Vacations.
However, Carlson Rezidor said it was in for the long haul.
"Investing in a hotel is not a short-term play. You need to be in it for the long haul and both Stream Walk and Carlson Rezidor believe in the long-term future of Zimbabwe and in particular the capital city and financial hub of Harare where there is a lack of quality hotels and no globally branded hotel for many years," explained Mr McLachlan.
US, China turf war
But the investment by Carlson Rezidor, particularly in a business opportunity that an American firm was reluctant to undertake, mirrors the current dynamics in the cut-throat global hotel business.
Chinese hotel interests are increasingly consolidating their foothold in the sector in order to ably complete with the might of American companies such as Hilton and Marriott.
Carlson Rezidor was formed after the Carlson family from Minnesota, US bought a 51,3 percent stake in Rezidor from Scandanavian Airlines (SAS) – the flagship carrier of Sweden, Norway and Denmark – in 2006.
The two entities launched their strategic partnership in January 2012.
However, the business has come under the orbit of Chinese interests after HNA Tourism Group, a unit of Beijing-based HNA Group, agreed to buy Carlson Hotels in a deal that is estimated to be worth US$2 billion on April 27, 2016.
HNA Tourism Group, a Fortune Global 500 company with operations across aviation, tourism, hospitality, finance and online services, will acquire Carlson and its 51,3 percent stake in Rezidor Hotel Group.
Under Swedish takeover rules, where Rezidor is listed, HNA Tourism is required to make a mandatory offer for the remaining 48,7 percent within four weeks of the transaction being completed. HNA has to reduce its equity in Rezidor to 30 percent if it intends to avoid the mandatory offer.
The business will be spurred by Chinese money though Carlson's current board chair, Ms Diana Nelson, is the granddaughter of company founder, Mr Curt Carlson.
Wave of Chinese investments
Overall, market watchers expect Carlson Rezidor to be the frontier for Chinese interests in the hotel business.
It is understood that soaring investment in overseas hotels is mainly being driven by increased travel by Chinese and concerns of the yuan's devaluation.
Independent estimates suggest that Chinese investors completed overseas deals worth US$100 billion in the first three months of 2016.
HNA in February bought airport luggage handler Swissport International Ltd for US$2,1 billion. In addition, the company, which is owner of China's fourth-largest airline, was a bidder for London City Airport, losing out to a group led by Ontario Teachers' Pension Plan Board.
HNA is the biggest shareholder in Spanish hotel company NH Hotel Group SA and last year acquired a 15 percent stake in Red Lion Hotel Corp. It has also agreed to buy a stake in a Brazilian airline, Azul Linhas Aereas Brasileiras SA.
As the turf wars for investments in property continue, Beijing-based Anbang Insurance Group made a US$14 billion offer for Starwood Hotels and Resorts. The business was taken over by American concern Marriott International Plc.
The financial wherewithal of HNA is, therefore, expected to drive Carlson Rezidor's growth.
Carlson, which considers Africa to be its biggest growth market, is signing a hotel every 37 days and opening a hotel every 60 days.
Its local investment is being promoted by Stream Walk, a business that is controlled by Mr Farai Jere.
Carlson Rezidor owns several brands such as Radisson, Radisson Blu, Radisson Red, Quorvus Collection, Park Inn by Radison, Country Inns & Suites by Carlson and the Club Carlson.
In Zimbabwe its lead brand will be Radisson Blu.
The project has received all regulatory approvals and Stream Walk and Carlson Rezidor are working on an "accelerated design programme".
Physical work will begin "in a few months time" after a groundbreaking ceremony.
It has been established that the mixed-use development that will be located in Eastlea will comprise offices, retail outlets and a hotel offering that will include 40 long-stay residences, a number of food and drink offerings, an all-day restaurant, a specialty restaurant and cocktail lounge, a pool bar and grill, and a large terrace.
Extensive meeting and event spaces are planned, including an Amani Spa and an 800-square metre gym that will be complemented by two swimming pools and a kid's club.
Radison Blu Hotel Harare is set to open its doors to the public in 2019.
In an interview with The Sunday Mail Business, Carlson Rezidor's vice president (business development, Africa and Indian Ocean) Mr Andrew McLachlan said the project had "Presidential Project Status".
"The total investment sum for the mixed-use Stream Walk development is US$135 million. Stream Walk has all approvals in place from EMA (the Environmental Management Agency), to full support from the (Harare City) Council.
"This project has been given 'Presidential Project Status' due to its importance to Zimbabwe . . . We offer the brand infrastructure, systems and support that help any new build (to) become a successful hotel. Our experienced team of technical and hospitality professionals is here to advise our project partners through every stage of each new build property, from preliminary concept to the grand opening, and beyond," said Mr McLachlan.
In a statement released through Carlson Rezidor, Stream Walk MD Mr Farai Jere said construction was likely to begin in March 2017.
"This is the manifestation of a dream which started in 2010. We thank the regulatory and the responsible authorities for facilitating the project, and the investors for supporting this initiative. The fulfilment of our dream would not have come better than partnering a big brand like the Radisson Blu. Our task is now to achieve financial close to enable construction work to commence by March 2017 and complete on time," he said.
Hilton Hotel debacle
Roping in Carlson Rezidor will be a corporate coup for Mr Jere who in 2013 unsuccessfully tried to partner American hotel behemoth Hilton Worldwide to build a facility on the very same land that Radison Blu Hotel Harare will be located.
Initially, the project was expected to start in April 2014, but it is understood that the risk-averse American business was spooked by rival business interests that raised the flag on the santions regime that currently exists against Zimbabwe.
The US congress passed the Zimbabwe Democracy and Economic Recovery Act (Zidera) – which effectively prohibits American businesses from dealing with local companies – in December 2001.
Hilton Hotels is one of the largest brands in the sector, with 4 600 hotels in more than 102 countries. Its premier brand portfolio includes Waldorf Astoria Hotels & Resorts, Conrad Hotels & Resorts, Canopy by Hilton, Curio – A Collection by Hilton, DoubleTree by Hilton, Embassy Suites by Hilton, Hilton Garden Inn, Hampton by Hilton, Tru by Hilton, Homewood Suites by Hilton, Home2 Suites by Hilton and Hilton Grand Vacations.
However, Carlson Rezidor said it was in for the long haul.
"Investing in a hotel is not a short-term play. You need to be in it for the long haul and both Stream Walk and Carlson Rezidor believe in the long-term future of Zimbabwe and in particular the capital city and financial hub of Harare where there is a lack of quality hotels and no globally branded hotel for many years," explained Mr McLachlan.
US, China turf war
But the investment by Carlson Rezidor, particularly in a business opportunity that an American firm was reluctant to undertake, mirrors the current dynamics in the cut-throat global hotel business.
Chinese hotel interests are increasingly consolidating their foothold in the sector in order to ably complete with the might of American companies such as Hilton and Marriott.
Carlson Rezidor was formed after the Carlson family from Minnesota, US bought a 51,3 percent stake in Rezidor from Scandanavian Airlines (SAS) – the flagship carrier of Sweden, Norway and Denmark – in 2006.
The two entities launched their strategic partnership in January 2012.
However, the business has come under the orbit of Chinese interests after HNA Tourism Group, a unit of Beijing-based HNA Group, agreed to buy Carlson Hotels in a deal that is estimated to be worth US$2 billion on April 27, 2016.
HNA Tourism Group, a Fortune Global 500 company with operations across aviation, tourism, hospitality, finance and online services, will acquire Carlson and its 51,3 percent stake in Rezidor Hotel Group.
Under Swedish takeover rules, where Rezidor is listed, HNA Tourism is required to make a mandatory offer for the remaining 48,7 percent within four weeks of the transaction being completed. HNA has to reduce its equity in Rezidor to 30 percent if it intends to avoid the mandatory offer.
The business will be spurred by Chinese money though Carlson's current board chair, Ms Diana Nelson, is the granddaughter of company founder, Mr Curt Carlson.
Wave of Chinese investments
Overall, market watchers expect Carlson Rezidor to be the frontier for Chinese interests in the hotel business.
It is understood that soaring investment in overseas hotels is mainly being driven by increased travel by Chinese and concerns of the yuan's devaluation.
Independent estimates suggest that Chinese investors completed overseas deals worth US$100 billion in the first three months of 2016.
HNA in February bought airport luggage handler Swissport International Ltd for US$2,1 billion. In addition, the company, which is owner of China's fourth-largest airline, was a bidder for London City Airport, losing out to a group led by Ontario Teachers' Pension Plan Board.
HNA is the biggest shareholder in Spanish hotel company NH Hotel Group SA and last year acquired a 15 percent stake in Red Lion Hotel Corp. It has also agreed to buy a stake in a Brazilian airline, Azul Linhas Aereas Brasileiras SA.
As the turf wars for investments in property continue, Beijing-based Anbang Insurance Group made a US$14 billion offer for Starwood Hotels and Resorts. The business was taken over by American concern Marriott International Plc.
The financial wherewithal of HNA is, therefore, expected to drive Carlson Rezidor's growth.
Carlson, which considers Africa to be its biggest growth market, is signing a hotel every 37 days and opening a hotel every 60 days.
Source - sundaymail
