8 November 2012

Namibia: Downturn Shrinks Ohlthaver and List?s Big Hotel Plans

OHLTHAVER and List's (O&L) hotel plans are withering as the worldwide financial crisis eats into the pockets of prospective tourists: the group yesterday said it is not only shelving its idea of a luxury hotel in Windhoek and rethinking the new Strand Hotel development in Swakopmund, but it is also severing ties with global industry player IFA Hotels and Kempinski.

O&L Group executive chairman Sven Thieme said the “global economic crisis had a major negative impact on businesses while hitting the tourism and travel industry much harder”.

Given the current state of the tourism and travel industry globally, the “construction of a modern hotel in Windhoek has been put on ice”, Thieme said in a statement.

The plan to build a five-star hotel in the capital was part of O&L's N$2,5-billion five-year investment strategy, launched barely two years ago.

The group is also “reviewing” the business model for the new Strand Hotel in Swakopmund, Thieme said.

“The outcome of the review will then be tabled to the relevant authorities for consideration and once all the necessary approvals have been obtained, we will make an announcement in this regard,” he said.

O&L planned to develop the Kempinski Strand Hotel to boast, among others, 87 hotel suites, 28 apartments, a public spa and fitness centre, a heated indoor swimming pool and a public seafood restaurant. The development sparked an outcry from Swakopmunders, who said it would block access to the sea and obstruct views, and resulted in a petition with more than 2 000 signatures.

The about N$350-million project has been struggling to get off the ground since the original Strand Hotel, one of the landmarks of Swakopmund, was demolished in 2007. O&L on four occasions had to ask the Swakopmund Municipality for an extension, the last time in March this year.

The Swakopmund Town Council agreed, on condition that O&L started building on August 1, 2012 and finished within 82 weeks or face penalties of N$10 000 a day.

Construction of the hotel development hasn't begun yet, a municipal spokesman confirmed to The Namibian yesterday. O&L has been paying rates and taxes to the municipality since 2007, costing the group in the vicinity of N$20 000 a month.

Thieme yesterday said the group is also “parting ways” with IFA Hotels and Resorts and Kempinski, the hotel management company managing the Mokuti Lodge and Midgard Country Estate.

In July, The Namibian reported that O&L terminated the contracts of all six Kempinski managers at Mokuti and Midgard.

Asked at the time whether the marriage between O&L and Kempinski was in trouble, O&L spokesperson Roux-Ché Locke said “the partnership between O&L and Kempinski remains unchanged. However, certain changes in management have occurred in order to streamline future strategic initiatives”.

Thieme yesterday blamed the global economic crisis and its impact on the tourism and travel industry for the breakup.

“It is for this reason that both IFA Hotels & Resorts as well as O&L found it necessary to review our partnership and hence our decision to end our partnership.”

Thieme said O&L signed the deal in 2007, “which at that stage had been estimated to be worth US$75 million”.

“Unfortunately the impact of the global economic downturn necessitated the group to review the business proposition and in the absence of the IFA partnership, O&L will proceed on their own which might mean that the investment value will also be slightly less than originally envisaged,” he said.

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