Zimbali hotel in business rescue as Kuwaiti owners were 'left with no alternative'
- The Fairmont Zimbali Resort has been placed in business rescue.
- Its Kuwait-based owner, IFA Hotels & Resorts, first invested in the hotel in 2003.
- SA hotels have been hit hard by the extended lockdown. Last month, the US hotel giant Marriott gave up its management contract of three local hotels.
- For more articles, go to www.BusinessInsider.co.za.
The Kuwaiti owner of the Fairmont Zimbali Resort on the large Zimbali estate near Ballito has placed the high-end hotel in business rescue.
“The extraordinary circumstances of a prolonged lockdown (...) with limited support from government – eroded our revenue base,” said the resort’s general manager Wayne Krambeck. “The losses that will be incurred in a gradual return to normality with ongoing uncertainty and the possible threat of further restrictions (are) just not commercially viable. We have been left with no alternative but to apply for business rescue.”
South African hotels have been bleeding during lockdown, and have only been allowed to accept leisure travellers from other provinces since last month. International borders have been closed closed for almost half a year.
In August, the US hotel giant Marriott announced that it will stop operating three hotels - the Mount Grace in Magaliesburg, the Edward in Durban, and the Protea Hotel Hazyview in Mpumalanga – in South Africa. Other top hotels have also been struggling, with Cape Town's iconic Mount Nelson Hotel retrenching more than half of its 251 employees.
In 2003, Kuwait-based IFA Hotels & Resorts bought a 50% stake in the Zimbali resort for R65 million, from sugar producer Tongaat Hulett’s property development arm, Moreland. Together, the companies planned to invest $100-million in the Zimbali resort, and the hotel opened in 2010.
Since then, IFA has invested in other Zimbali developments, including another hotel on the residential estate, the Zimbali Lodge.
Only the Fairmont Zimbali Resort will be placed in business rescue, a spokesperson confirmed.
The resort has more than 170 rooms and villas, and Krambeck says it saw “exponential growth with record turnover” from November 2019 to March 2020, before lockdown started.
It has remained closed for guests since then, and will stay shut for now.
Business rescue details
Pierre Berrange has been appointed as business rescue practitioner for the hotel.
Business rescue is aimed at “rehabilitating” a company that is in severe distress. The business rescue practitioner has to run and restructure the business with the aim of putting the company on a sustainable footing and save jobs.
If the company can’t be saved, the practitioner must try to ensure better returns for creditors.
Business rescue offers protection against legal claims by creditors.
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