Southern Sun has reported a surge in business tourism at its Maputo facilities as Durban port woes push companies to divert more business to Mozambique.
The hotels operator said in its annual report published on Wednesday that its Durban establishment was having a difficult trading period due to a cocktail of issues, chiefly the city’s bad reputation and port delays causing diversion of shipping business to Maputo.
Southern Sun has reported a surge in business tourism at its Maputo facilities as Durban port woes push companies to divert more business to Mozambique.
The hotels operator said in its annual report published on Wednesday that its Durban establishment was having a difficult trading period due to a cocktail of issues, chiefly the city’s bad reputation and port delays causing diversion of shipping business to Maputo.
“Despite development delays in the oil and gas sectors in Mozambique, Southern Sun and StayEasy Maputo achieved ebitdar (earnings before interest, taxes, depreciation, amortisation and restructuring) growth of 37%, benefiting from shipping business redirected from Durban’s port,” CEO Marcel von Aulock and chair John Copelyn said in a joint letter to investors.
“KwaZulu-Natal has had a difficult year and, while it was the group’s strongest region during the pandemic when it benefited from domestic tourism as well as corporate and government business due to its proximity to Gauteng, its ebitdar contribution has reduced to 16% of total group ebitdar.
“Durban has struggled to attract tourism as the negative PR about issues such as polluted sea waters and the after-effect of the July 2021 riots affect public perception of the city,” they said. Corporate demand also relocated to Umhlanga where the group was underrepresented.
Durban is a pivotal hub for the Southern African region, serving as a trade link to the Far East, Middle East, Australasia, South America, North America and Europe. The crown jewel in Transnet’s port portfolio, Durban Container Terminal Pier 2, handles 72% of Durban port traffic and 46% of SA’s import and export traffic.
But with poor Transnet service, characterised by incessant bottlenecks and backlogs at SA’s main port of Durban, the port of Maputo has expanded quickly in recent years to meet the demands of both SA and Mozambique’s expanding economy.
Copelyn, who is also CEO of Hosken Consolidated Investments, which has stakes in Southern Sun, Tsogo Sun and eMedia, was equally scathing on Durban’s dysfunction in the group’s annual report published on Thursday. “The Durban municipality, for example, has recently put out tenders for two of the most iconic hotels on the Durban beachfront, the Maharani and the Elangeni,” he said.
“The fact that not a single hotel group saw fit to even visit the hotels to consider putting in a bid has forced us to recognise that we are largely alone in our efforts to retain the area as the vibrant holiday destination it has been for many decades.”
Local companies, including mining houses and industrial logistics operator Grindrod, were increasingly using Maputo port as an alternative to facing the costly delays at Durban port. This port is strategically positioned as a gateway to the Sub-Saharan region and is close to the Gauteng industrial hub, as well as the Limpopo and Mpumalanga mining regions.
In February, the Mozambican government extended its concession with Grindrod, DP World and other operators to help run the port until 2058 including a $2bn expansion that will draw cargoes from SA’s archaic trade infrastructure.
A phased Transnet recovery plan has been introduced to stabilise the SA port’s operational and financial performance by March 2025, including a R47bn Treasury package. It looks to expand and modernise container capacity at ports through accelerated private sector participation and strategic transactions, but its full effect is yet to materialise.
Reforms
Opening parliament recently, President Cyril Ramaphosa vowed that SA would continue transformation reforms by implementing the freight logistics road map. He said the national logistics crisis committee’s work had already improved operational performance of freight rail and ports.
Southern Sun said it remained optimistic that the new provincial government would continue its commitment to rebuild and improve conditions in Durban.
Though the group’s occupancy at 58.6% reflected the low economic growth in SA, the company flagged confidence in a turnaround, saying middle-income international travellers had not yet recovered to pre-Covid-19 levels, which represented a growth opportunity for group hotels in Gauteng and KwaZulu-Natal.
The hotelier said additional activation of incoming flight capacity to the country and streamlining visa application procedures for certain growing areas such as China and India, might further promote tourism in SA.
Southern Sun Dar es Salaam in Tanzania, the only group hotel remaining closed since the pandemic, is expected to reopen in October.
Businesslive
