Q&A: Adapt or Die

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Who Are Three Cities?

The Three Cities Group is a hospitality company focusing on the management of quality hotels, resorts and lodges in Africa, as well as being the largest hospitality training provider in Southern Africa, via its division, the International Hotel School. That’s us, in a nutshell.

What are your thoughts on the current state of the African hotel industry?

The African hotel industry currently presents enormous opportunities, with demand for accommodation in North, West and East Africa outstripping supply. This is illustrated by the tremendous amount of hotel construction under way in these regions by international hotel operators. At the beginning of 2011, a survey revealed that 156 new hotels – and, as a result, 31,000 rooms – were in development, in the above-mentioned regions, across the continent. South Africa, on the other hand, has entered a phase of over-supply, which is demonstrated by the reduction in average room rates across the board, as competitors battle for market share.

Does Three Cities have any big plans in the pipeline?

Yes, we do. We have three potential hotel projects in the pipeline for Gauteng (greater Johannesburg area), one in Mozambique, three in Nigeria and two in the Western Cape of South Africa. We are also entering the mid-market hotel segment, as we see the opportunity for growth in this area, as consumers seek more value and corporations buy down out of the four and five-star segment to cut costs, in these difficult times.

What is the Three Cities strategy in terms of acquiring hotels?

It is not our intention to just seek growth for growth’s sake, but to ensure that any hotel we take on operates in an environment where there is sufficient demand for accommodation. It’s simple – if we do not believe that we can add value, we would rather walk away from the opportunity.

What have been the challenges of the past few years?

The global and local economic recession has placed enormous pressure on the hotel business over the last two years, with a noticeable decline in both international and local travel. This challenge, however, hasn’t been all bad. It has resulted in us, as a business, taking a fresh look at the way we operate, in respect of value offerings and ongoing operational costs. It has been a hugely beneficial exercise, in that when the cycle turns, we are well positioned to generate a lot more top and bottom line. Another challenge the market is experiencing at the moment, is the lack of qualified hospitality staff, as a result of the enormous growth of hotels in anticipation of Soccer World Cup demands in 2010. As a group, we have not been affected by this due to our International Hotel School providing us with a stream of internationally qualified hotel graduates.

What do you think is going to give Three Cities the edge, going forward?

I think it’s our people and our entrepreneurial structure. Our management team is fairly young, yet experienced, we have great technology with cutting-edge online reservations systems and each division within our group is treated as a profit centre, which encourages plenty of creativity and innovation. In this market, I believe that it is not the big that will survive and prosper, but the quick – those that are nimble and are able to change direction easily. The Internet has changed the way we do business, allowing virtually anyone to set up operations and compete.

Your thoughts on the consumer protection act and its effect on your industry?

I think the Consumer Protection Act is fraught with difficulties. The biggest challenge is going to be the policing thereof – this structure still needs to be set up. It is my view that ultimately, the courts will set precedents which will thereafter change the way we operate. Until this happens, I don’t think that there will be a material change in the way the industry operates.

How did you get into the hotel business?

By default, actually. I studied law and put myself through university running restaurants at night. But, I found corporate quite boring, so I went back into what flows in my veins. That is, hospitality and serving people.

What do you like to do away from the office?

I love spending time with my family. We just love food and Sundays in our household is always the family cook-off. Being physically fit is also very important to me, so I swim and go to gym every day. Of course, there’s also my other passion, which is fly fishing.

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