Tsogo launches hi Hotels, eyes Beverly Hills expansion

With the launch of its innovative hi Hotels brand at Joburg’s Montecasino precinct set for the end of January, JSE-listed hospitality giant Tsogo Sun Hotels will be marking the start of what it sees as a chain of new ‘economy segment’ hotels across several mixed-use sites in SA.

The group, which was unbundled from the bigger Tsogo Sun Gaming group earlier this year, also plans to expand its iconic Beverly Hills Hotel in Umhlanga Rocks, north of Durban.

The five-star Beverly Hills Hotel in Umhlanga Rocks, the oldest hotel in the Tsogo Sun portfolio. Image: Supplied

This was revealed by Marcel von Aulock, CEO of Tsogo Sun Hotels, in a recent interview with Moneyweb.

He said the first hi Hotel in SA will open at Tsogo Sun Gaming’s flagship Montecasino property and that the group is actively looking to grow the new chain. Its notable established brands include Southern Sun, Garden Court, Sun Square and StayEasy, while its five-star properties and resorts are individually named and include The Palazzo at Montecasino and the Beverly Hills Hotel.

“The gaming group has invested around R80 million in the hi Monte hotel development and Tsogo Sun Hotels will operate the property. It is an exciting and innovative new limited-service hotel offering from Tsogo Sun, which is built using a modular design that significantly reduces overall development costs,” he notes.

Marcel von Aulock, CEO of Tsogo Sun Hotels. Image: Moneyweb

The Garden Court, Sun Square and StayEasy brands are also in the economy or select-service hotel segment. However, Von Aulock says the hi brand has no kitchen and won’t offer breakfast services, due to its location in prime entertainment hubs and mixed-use spaces such as at Tsogo’s casino properties, which boast restaurants and other hospitality offerings.

“While the first hi hotel will open at Montecasino, we believe the brand will work well in other mixed-use properties or nodes such as regional shopping centres, where guests can choose where to eat and have other entertainment options within walking distance,” he adds.

“Our hi Hotels brand also has lower development costs due to its modular design, which means it can easily be built atop a parking structure without significant engineering and civil construction work,” he explains.

Tim de Raedt, hi Hotels’ director of operations, tells Moneyweb that the each of the hotel room ‘boxes’ as part of the new hotel at Montecasino were in fact built off-site in a factory near City Deep, south of Joburg.

“The modules were then brought to Montecasino and assembled with a mobile crane into the hotel structure, which we now see.

“It’s similar to shipping container construction that we are seeing in SA and other parts of the world.

“However, we opted to develop our own sized room modules for great flexibility and to suit our needs,” he explains.

Tim de Raedt, hi Hotels’ director of operations. Image: Suren Naidoo, Moneyweb

De Raedt says the more lightweight design and construction process meant that the new hi Hotel development was at the cutting edge of innovation. “When you look at the hotel now, you will not believe how it was built …

“In addition to the cutting-edge design and construction process, the hotel itself will offer online or self-service check-in options.

This, together with the fact that it is a limited service hotel, means that it effectively will only need around 15 people to operate at full occupancy.”

The hotel has Bluetooth-enabled doors for its rooms to enable the roll-out of mobile-phone ‘key’ access in the future. Meanwhile, TVs in all the rooms are part of a system that has been developed with online streaming in mind and is linked to the hotel’s free high-speed WiFi.

De Raedt says the group plans to open several more hi hotels in SA, but the initial focus will be on Gauteng. “We are looking to announce our next hi hotel development by the end of the first quarter of 2020 and have received some good interest in the concept from developers and property groups.”

Tsogo Sun and its JSE-listed peer City Lodge Hotel Group are facing increasing competition from international and African hotel groups in SA, in addition to online options such as Airbnb.

At the African Hotel Investment Forum in September, the US-based Hilton hotel group announced that it will be bringing its select-service Hampton by Hilton brand to SA, with the first development earmarked for Sandton. Competitors such as Radisson Hotel Group and Marriott International also have ambitious expansion plans in SA.

With Radisson and Hilton both having signed major new hotel projects in Umhlanga, which are currently under construction, Tsogo Sun has been eyeing an expansion of its Beverly Hills Hotel on the Umhlanga beachfront. The grand dame hotel was the first hotel in the group to be built by legendary hotelier Sol Kerner in 1964 and has retained its five-star status.

Asked about the plan, Von Aulock said an expansion of the landmark hotel is still on the radar of the group, however, it is a “medium-term project” and no funds for the development have been committed yet.

“We are still quite keen on an expansion of the Beverly Hills Hotel, but it is not an immediate short-term project. The expansion will also involve a substantial modernisation of the existing hotel.”

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