Millat bets on more new hotel properties SA Hyatt

The tourism and hospitality industry has been one of the hardest hit sectors in the face of the global Covid-19 pandemic, which has been raging for around 22 months now. However, there are some green shoots.

South Africa experienced no lockdowns during the December holiday season – except, of course, for initial international travel bans on the country due to the discovery of the Omicron variant in November .

On the green shoot front, in this episode of The Property Pod we speak to Hamza Farooqui, CEO of Johannesburg-based Millat Investments.

A key element of the group’s investments is in real estate and hotel space. Millat owns the Hyatt Regency Cape Town hotel property and opened the Hyatt House hotel in Sandton in November. At the opening, the group announced that Hyatt House Sandton was part of the R300 million investment in new hotel properties in South Africa.

However, Millat has other projects in the works. Farooqui gives us an overview of the group and these plans.

Highlights of his interview are below. You can also listen to the full podcast above or download it from iono, Spotify or Apple Podcasts.

Hamza Farooqui (right), seen here with Gauteng Premier David Makhura at the opening of the Hyatt House Sandton in December. Picture: provided

Strong points

“We obviously do not disclose that [monetary value of the portfolio] …because we keep it private. But the tourism and real estate portfolio is of significant size and heritage, which during this time of Covid has allowed us to grow significantly.

“We’re a private organization that focuses on unique opportunities – I wouldn’t say just special situations, but also where there’s some sort of value arbitrage involved.”

“Over the past two years and in a climate like this, we have found many opportunities in the field of tourism and leisure.”

“We have always had property in Cape Town, which we [re] open in December 2020 [under the Hyatt brand]but over the last two years we’ve been able to build a thesis that focuses on optimizing asset performance in this climate, hotel branding – a very important part of our thesis – and really seeing how we can position as a group to prepare for a recovery, which is imminent at some point.

Read: Hyatt to operate former Hilton Cape Town hotel

“Our view is that this should be a very strong recovery. As you said in your introduction, we have opened our extended stay Hyatt House Sandton property which is the first global branded extended stay on the African continent, and we are very excited to do more.

“We also, towards the end of last year, announced our third hotel, the Hyatt House at Rosebank, which is scheduled to open in mid-February.

“So it has been a very busy time for us. When people are closing hotels, have a very yellowish view of the industry, we’re actually opening hotels and branding them and trying to build a story of scale and how we can really get traction in the market, which I think , has been very under-watched and under-performing in this country.

You must be confident enough in the future of the hospitality industry and the real estate sector to invest now?

“Absolutely. If I give you our personal view, we are almost at the end of this pandemic – which is now becoming endemic. The world is learning to live with it, and I think that in itself creates significant opportunities.

“I can tell you firsthand that in December, although we couldn’t get the kind of price traction, most of our hotels were fully booked. People are realizing they want to go out, they want to travel. I think we as humans are meant for face-to-face personal travel interaction, it’s a fundamental part of who we are.

Read: Time to change the face of tourism in Cape Town

“So for the sector and the industry in general, I think the fundamentals remain strong and I think they will come back. I think it is even further [demonstrated] when you look at a country like South Africa, which is still very deeply undervalued, where you have a great climate and a lot of genuine opportunities for tourists. Yes, it’s a long-haul destination, but we have all these factors where historically not much has happened in the tourism infrastructure space.

“The last time the hotel industry was really shaken up was in 2010, during the FIFA World Cup. Since then, there has been no real supply. There was no real innovation. There was no real fire in the belly.

“If you see what keeps major global centers like New York, London and Dubai active, there are constantly new tourism products and new restaurants. This has not been the case in South Africa. From an investment perspective, our view is that now is the best time to really go out and do this innovation and to get into this business and build at scale. So that’s exactly what we’re doing.

Additional investments…

“As far as our prospects are concerned, we are absolutely doing more. Obviously, I can’t give more details at this stage, but in the coming weeks there should be a major announcement in which we will increase the portfolio even more.

“It’s also something very compelling from a product perspective, so we’re very optimistic.

“That being said… We are also very careful and judicious operators. We don’t open hotels just to open hotels. We enter the company, we arrive at the P&L [profit and loss side]. We don’t just let big brands dictate and direct what needs to happen. We pay close attention to detail and that’s really what was missing in the industry.

“You have the big operators, the big publicly traded companies, that pretty much run the hotel/gaming companies, and they’ve been there for ages. But then there’s no one in the middle who really understood the sector, understood innovation.

Read:

“If you look at the Hyatt House Sandton, it’s priced as a select-service product, but you walk in and you feel like you’re in a full-service hotel. It uses huge outdoor spaces. He is enjoying the good weather. It has a food and drink outlet which is compelling. These are all drivers that make South African tourism and what South Africa has to offer fascinating – not only for international tourists, but also for local tourists.

Partnership with Hyatt…

“We have worked with major global brands. We had a deep relationship with Hilton. We also owned a Conrad brand for several years before leaving this property. One of the things with big brands is that they are all very good, but it all depends on how you approach them and work with them and how you make their brand and their engine work. A lot of them are fighting to locate themselves, a lot of them are fighting to really unlock value.

“That’s why if you look at South Africa, you don’t have a landscape of all the great [international hotel] brands that really claim this market because you have very strong local brands in place.

“That being said, it is changing and it will change even more. As South Africa becomes increasingly intertwined with the international tourism market, as South Africans begin to travel more and more, they will recognize these brands. They are going to expect some type of quality and brand standard.

Read: Rosebank development secures Joburg’s first Radisson Red hotel

“We’ve been very fortunate to have a meaningful alignment with the Hyatt Group, where they understand what matters to us, they understand what our vision is, and there’s been a very important meeting of minds – and based on that , we are developing the portfolio.”

“I strongly believe that some of this innovation and uniqueness comes from these global brands. If you go back to any major center in the world, these global brands dominate and dominate mainly because of the scale of distribution, the breadth of what they bring, and obviously customer service and satisfaction .

“If you stay at a Hyatt hotel, you know that fire, light, safety and guest comfort issues are on par with the best. It’s expensive to implement, but these are all parts that matter. I think the South African consumer is becoming more aware and aware that this is what they want.

“So we are very excited. We are very satisfied with the partnership we have formed. These properties are managed by them [Hyatt] under a management agreement and over the years the group has figured out how to get the most out of these agreements, which frankly very few have in the country.

“Banks don’t like management agreements, and many landlords don’t understand management agreements. We were able to create a very specific niche on how to get the most out of these global brands and build a relationship with them and make it work. »

“So we’re very excited and we think the future holds great things for us and, I think, for Hyatt.”

Focus on Gauteng…

“I think there will be special attention from our perspective in Gauteng. I think the luxury segment with a heavy focus on leisure is something we are currently working on and I think that will be a big announcement.

“We are excited about the opportunity we have with Hyatt and what we plan to do. But that being said, there are also opportunities that we are looking at in the selected services market.

“So a lot of it is likely to be in Gauteng as we see growing demand here. It is one of the growth centers of the African continent and a center where we expect a strong recovery. »

“But we are very open to more opportunities. We have a very rigorous framework; we don’t take whatever happens.

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