Protea is once again an indigenous flower
By Lauren Cohen
Black empowerment consortium buys back remainder of hotel group.
In a vote of confidence in the challenging local tourism industry, Protea Hotels is once again back in South African hands. An existing consortium of broad-based black economic empowerment shareholders have acquired equity previously held by Stella, the Australian travel services and hospitality group.
Two years ago, Stella paid R1.48-billion for the whole of Protea. Stella then sold 26% of the company to the consortium, whose members include Popcru Investment Holdings, the National African Women’s Alliance, AKA Capital, the Food and Allied Workers’ Union, Prime Portfolio Investments and Hoyohoyo.
Protea managing director Arthur Gillis told Business Times that the deal, still subject to approval from the Competition Commission, would probably see the group’s shares divided equally between the hotel’s management team, Investec Private Equity and the BBBEE consortium.
“The deal is a shot in the arm for Africa and South Africa,” he said.
Some of the big names in the consortium include Eskom chairman Reuel Khoza, chairman of the Audit Committee of the JSE Sam Nematswerani, and Datacentrix chairman Gary Morolo.
Gillis conceded that the Stella deal had not benefited the group as much as anticipated, citing the global meltdown that affected international travel.
“South Africa was cushioned from the blow to a certain extent... because as a destination we are a very special place with much to offer. We have also been bolstered by the vibrant domestic and regional (African) business and leisure markets.”
Protea chairman Otto Stehlik said the price paid for the deal was “highly acceptable and based on return on investment expectations”.
Consortium spokesman Themba Matsane, of Popcru, said the members were “very appreciative of the business coming back to South Africa”.
“It indicates business confidence in South Africa in spite of global economic challenges. We see a lot of potential in Protea.”
Matsane said African people traditionally did not take holidays, “now we are encouraging them to take their families and de-stress”.
The impact of fewer low-end international tour groups from Germany and Britain had been felt in the past four months, but Gillis said bookings looked good going forward.
The group, which opened hotels in Kimberley and Bloemfontein recently, will launch another six before the kick-off of the soccer World Cup next year.
Gillis insists the group is looking beyond 2010.
“It is a means to an end, not an end itself. If South Africa gives every person (tourist) a great experience we will end up with ambassadors for our country which no amount of PR or advertising can generate.”
Stehlik, who chairs the ministerial advisory council for the World Cup, said Protea staff had been trained in ways they could contribute to the event’s success and motivated as to the benefits.
Gillis said Protea had always believed that BEE should not be legislated.
“We didn’t do anything because we had to, we did it because it made sound business sense. We have had an empowerment programme for 18 years, because morally it is the right thing to do.”
Stehlik said he had approached Cosatu and asked “for the most militant trade union around”.
“A week later we had met Popcru, who are very broad-based and have taught us how to deal with staff from a union perspective. Our black empowerment partners have added value.”