Cresta Marakanelo, the Botswana Stock Exchange quoted hotel group, has outlined its expansion ambitions domestically and regionally while admitting that inevitably competition will eat into its market share, which will need the company to develop strategies to have a competitive edge.
At an analysts and investor briefing in Gaborone on Friday, the company’s Chief Executive Officer, Tawanda Makaya, revealed that their five-year strategy is already beginning to bear fruit with major refurbishments and one eye on acquisitions if opportunities present themselves.
“We will continue to explore the market to increases revenues,” said Makaya, adding that they face competition, especially in Gaborone where three new hotels – Lansmore, one at Riverwalk and Sebele Centre – will eat into the group’s market share.
“We are bound to lose market share, (but) we must have a competitive edge to maintain our market share. The group further continues to look for opportunities locally and outside.”
Cresta controls between 50- 60 of the market in Gaborone, but with the coming of more swankier hotels, new strategies will need to be put in place to deal with the challenges.
In a bid to increase room stock and revenues, in the past year, the group acquired the 78-roomed Golfview Hotel Ltd in Zambia for P20 million. Cresta said it will make sense to add two or three properties in that market because of incentives that Lusaka has for Foreign Direct Investment (FDI).
“We are looking at expansions in Zambia and we are looking to conclude deals in the next three years,” added Makaya. Cresta expected 55 percent occupancy last year from Golfview with the figure increasing to 60 percent over five years.
The group started its growth plans locally with the launch of P6.5 million Cresta Mowana Safari Resort Spar in Kasane, which transformed the way boutique hotel business was conducted in the country.
The group also completed and opened the 64-roomed Cresta Mahalapye Hotel, which is targeting the mining boom and tourists on the busy A1 route. During feasibility study, the need for a high standard hotel in that region came out strongly. Mahalapye is the home to the Botswana Railways and that was another motivating factor to build this facility with three conference facilities. Cresta expects the hotel to break even next year.
The P5.5 million refurbishment of the Cresta Marang in Francistown began last week and it will give the hotel more arsenal in the town where it already has sizeable market share. Makaya, however, warned that his company will maintain its standards and will not rush to buy hotels to increase revenues.
“We will continue to look for more hotels in Botswana. We will (however) acquire hotels with acceptable standards,” said Makaya, adding that they have been approached by a number of hoteliers in Botswana, but declined the gestures because of the standards.
The Cresta investments are already starting to bear fruit with the Zambian operation generating P23.8 million of the total P243 million headline earnings made by the group. It is expected that this year, the Zambian operation will give the group P18.2 million in turnover. It paid a P1 million dividend to Cresta Marakanelo for the results in the period ended 31, December 2012.
Founded in 1974, Cresta, initially BDC Hotel Management, has big names like Cresta Lodge, President Hotel, Botsalo Hotel, Bosele Hotel, Marang Gardens and Hotel, President Hotel, Riley’s Hotel, and Cresta Mowana Safari Resort Spar under its arm.
Cresta faces challenges in the market, including the entry competitors with a number of room stock increased in the markets where the company operates. The company was forced to compete with peers with the entry of more than 100 rooms, which came into the market in 2011.