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Published on November 13th, 2012 | by admin

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O&L’S KEMPINSKI DEAL TURNS SOUR

Ohlthaver and List will go it alone after its link with the 5-star Kempinski group hit the buffers, reports BRIGITTE WEIDLICH

Just months away from its 90th company anniversary, Namibia’s Ohlthaver and List Group has appointed two new hotel managers to run their fairly new subsidiary O&L Leisure, which has the well-known Mokuti Lodge near the Etosha National Park and Midgard Country Estate in its stable.

They are replacing professionals from Germany’s Kempinski Hotels group, who appear to have become too expensive for O&L, tourism industry insiders say. O&L appointed hotel industry veteran Bruce Hutchison as MD of the leisure subsidiary and experienced Zimbabwean national Shepherd Chinhoi as general manager of operations.

Tight-lipped

While one Afrikaans local newspaper reported on the new appointments in mid-October as having come via a press release from O&L, this journalist was informed by Patricia Hoeksema, group manager for corporate social responsibility at O&L via e-mail a week later that “O&L did in fact not issue a media statement on the above subject last week.” “The only communication from our leisure portfolio was within the industry – business to business.”

As soon as matters “are at a point where we are able and ready to discuss these in the public domain,” this will be done, Hoeksema wrote.

The five-year business relationship between O&L, Kempinski and Kuwait-based IFA HR was hailed back in 2007 as an exciting new development for Namibia’s tourism industry, but seems to have died a slow death over time.

Early in July this year, The Namibian reported that the six Kempinski managers at Mokuti and Midgard had been served with contract termination notices by O&L for the end of June. The reason was apparently “the current economic climate within Namibia”, which caused a “restructuring of the management team” for the two tourism spots, the paper reported.

Now O&L Leisure will go it alone at Mokuti and Midgard. In addition it will be developing the Strand Hotel in Swakopmund without Kempinski. Midgard was only given to Kempinski to manage in July last year, while Mokuti Lodge was under Kempinski management from 2008. Both resorts remained under the ownership of O&L.

“The first phases of integration of the Midgard Country Estate within Kempinski are underway with evident synergies in various functions such as sales and marketing, human resources, finance and operations,” O&L announced in March 2011. “The project shall witness immediate influx of talents and resources to positively influence service standards and tangibly enhance the guest experience.”

Kuwaiti partners

The Kuwaiti company International Financial Advisers (IFA) through its subsidiary IFA Hotels & Resorts South Africa (IFA HR SA) inked a deal with O&L in 2007 and also brought the Kempinski Group as operators and managers to Namibia. However, IFA HR SA sold its share in the joint venture to O&L in 2010. The IFA Group developed the huge Palm Island project in the ocean off Dubai and the Zimbali Coastal Resort in KwaZulu-Natal, South Africa, which experienced a bumpy road until completion literally days before the start of the 2010 World Soccer Cup in South Africa.

The 2007 joint venture with O&L was worth US$75 million and was named OLIFA HR Namibia. Both partners held 50 percent ownership. The company was set up in 2008 and was seen as a successor to the Namib Sun Hotels group, which had previously run O&L hospitality destinations.

The Namibian resorts to be upgraded, managed and operated by Kempinski in the 5-star top tourism segment – were the Strand Hotel, King’s Den Lodge in the Caprivi Region, Mokuti Lodge and a fourth hotel to be developed in Windhoek. “IFA HR SA will also assess the potential for residential and retail opportunities surrounding these properties, with a view to integrating them to the adjoining hotel properties”, it was announced in 2007. Not much came of that, with IFA HR SA being hit by the global financial crisis. IFA HR SA was then dragged to court by sub-contractors for allegedly owing millions of rands over the Zimbali resort.

Major losses 

According to a SENS announcement on the JSE in October 2010, an O&L subsidiary – Khan Construction Pty Ltd – held the 50 percent equity in OLIFA HR Namibia and bought out the 50 percent held by the Kuwaiti’s South African subsidiary.

IFA HR is listed on the Kuwait and the Johannesburg stock exchanges.

“Shareholders are advised that IFA has signed an agreement with Khan Construction Company, dated 4 October 2010, relating to the sale of its shares and loan claims in OLIFA for a total cash consideration of N$49.039 million,” the notification for the stock exchange read.

“The consideration, including interest at NedBank Namibia’s prime rate, is to be settled in twenty-four equal instalments commencing on 31 May 2011 with the last payment being due on 30 April 2013.”

Even a ‘discount’ was offered should Khan/O&L pay sooner: “Khan shall be entitled to anticipate the payment of the purchase consideration in a reduced amount of: – N$34.7 million if payment thereof is made between 1 and 31 October 2010; – N$35.425 million if payment is made between 01 and 30 November 2010; and – N$36.163 million if payment is made between 01 and 31 December 2010,” the JSE was notified.

“The sale of IFA’s interest allows its partner, the O&L Group (holding company of Khan) to promote these operations in Namibia and IFA will direct its attention to its other South African investments. The proceeds from the OLIFA disposal will be utilised to fund ongoing operations,” the seemingly cash-strapped IFA company stated.

Midgard 

According to the  O&L Group annual report of 2010, its “equity losses from OLIFA Hotels & Resorts amounted to N$13.4 million (2009: N$5.9 million). Midgard recorded losses of N$5.6 million in 2010 and N$5.9 million in 2009 (the N$5.9m is included in the N$13.4m)

It had pumped some N$11 million into Midgard for renovations and rooms at Mokuti have been upgraded for N$15 million from December 2010 to March this year, according to the O&L annual report for 2011.

Now it seems that O&L will be marketing Mokuti, Midgard and the future Strand Hotel without the aid of international hotel groups.


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