On the day that President Cyril Ramaphosa announced the lifting of the Covid-19 international travel ban to South Africa, one of the country’s most luxurious internationally operated resort hotels entered a business rescue process.
The five-star Fairmont Zimbali Hotel, near Ballito on KwaZulu-Natal’s North Coast, was effectively placed under administration on Wednesday.
Its owners IFA Fair Zim Hotel & Resort Proprietary Limited have opted to go into a business rescue “to safeguard the interests of all its stakeholders”.
The decision comes in the wake of the Covid-19 economic crunch, which has seen the hotel being mothballed since the start of the lockdown.
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The company confirmed the business rescue move to Moneyweb in a statement on Thursday, saying it comes in response to the “unprecedented circumstances resulting from Covid-19 and the prolonged SA government-imposed State of Disaster” measures.
Fairmont Zimbali Hotel opened ahead of the FIFA World Cup in 2010 within the multi-billion-rand Zimbali Coastal Resort estate, in what was touted as one of the biggest foreign direct investment into SA’s tourism industry. Kuwait-based IFA Hotels and Resorts was the investor.
The hotel’s general manager, Wayne Krambeck, said Fairmont Zimbali Hotel had faced an unprecedented situation following the lockdown and border closures, despite experiencing exponential growth with record turnover between November 2019 to March 2020.
“We have been in support of our President and the government’s reasons for implementing the initial lockdown period. However, the extraordinary circumstances of a prolonged lockdown – now day 176 and the longest in the world to date with limited support from government – has eroded our revenue base,” noted Krambeck.
“The losses that will be incurred in a gradual return to normality with ongoing uncertainty and the possible threat of further restrictions is just not commercially viable. We’ve been left with no alternative but to apply for business rescue,” he said.
As part of IFA Fair Zim Hotel & Resort’s board decision to file for business rescue, it has appointed Pierre Berrange as the business rescue practitioner.
“The business rescue practitioner will formulate a rescue plan and ensure that the best way forward is found for all stakeholders in accordance with all regulatory requirements,” the company noted in its statement.
“All stakeholders and suppliers will be contacted by the business rescue team to plan the way forward in accordance with the processes as provided in the Companies Act,” it added.
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South Africa’s five-star hotel segment has been particularly hard hit by the Covid-19 lockdown, with much of its business coming from foreign tourists and corporates. Many larger high-end establishments remain closed, including the likes of the Mount Nelson, Table Bay Hotel and Westin in Cape Town.
With the gradual lifting of international travel bans as of October 1, announced by Ramaphosa on Wednesday, some of these hotels are now expected to open. JSE-listed Sun International, which owns the Table Bay Hotel, confirmed to Moneyweb that the hotel will reopen on November 1.