Indaba Hotel and Conference Center operations director, Rob Mickel, pulls no punches, as he reflects on the state of the South African hospitality industry, the post-2010 dip, and the way forward for properties in a similar space.
Rob Mickel calls it as he sees it, and the message is clear – the past eight months have been a difficult time for the nearly 60-year-old 4-star hotel in Fourways, in the north of Johannesburg.
“It’s been an uphill battle, trying to fill 150% more rooms in the Fourways area, and we’ve gone into a bit of a rates war,” he says.
The reference Mickel makes is to the three new hotels going up in the immediate vicinity in the last three years – in the form of the SunSquare Montecasino, the Southern Sun Montecasino, and the City Lodge Fourways. In the past, the Indaba and the 5-star Palazzo at Montecasino pretty much had the run of the area.
“I call them the ‘heyday years’ – 2004 to 2009 – where we enjoyed occupancies of around 85%, year round,” says Mickel. “It couldn’t get better and we rode the wave into the 2010 World Cup.”
But, with the three new hotels opening up, room numbers in Fourways jumped from 460 to 1200. Still, the Indaba didn’t feel the full effect until early 2011, thanks to some displaced business from the World Cup. Their occupancy is currently sitting in the middle 40% range, but Mickel is confident that it will grow into the 60’s, with the final quarter of the year already looking a lot more promising.
“We’ve had to change our focus, in this economic climate,” he says. “It was always predominantly conferencing (Indaba has 24 conference rooms), but we did enjoy airline and corporate support. Airline has now gone, corporate has gone and I don’t think I’ll get those market sectors back.”
“I have to increase conference support, I have to increase my tour operator support base, and I must work on as much leisure as I can get. Corporate support, I’m going to get a little bit, but not a lot.”
Mickel also believes that many corporates are now leaning even more heavily on the established hotel brands, because of the cross-benefits.
“Definitely. They lean towards that, because they can get group agreements and they have the mass – a lot of hotels. They know the product, they know what they’re getting, and they’ve got a preferred rate,” he says.
That being said, the Indaba has resisted being absorbed by one of the big hotel groups. Instead, they are re-investing in the property, having recently upgraded 88 rooms and working on another 70. They are also putting in 42-inch TVs, laptop safes and glass shower doors – all requirements for a 4-star property.
And Mickel remains optimistic. Not just about his own backyard, but the continent as a whole, although the current over-supply of hotel rooms in South Africa is clearly not lost on him.
“I feel quite positive about Africa and we certainly see opportunity outside of southern Africa. I think southern Africa has had its growth in the hospitality industry, in the major centres, and I don’t think you’re going to see new hotels going up for quite some while. But, there’s definitely opportunity in neighbouring states.”
And what about the Indaba?
“It is a bit depressing being in the market environment that we are, but we’ve just got to go back to the basics of providing outstanding service. Give the clients what they want, and they’ll come back for it. Give them good food, good service, at a good rate, and make the people feel comfortable. You’ll get that repeat business time and time again”.€