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Landmark hotel under hammer

20 Jul 2021
3* Fortis Hotel Malaga in the lowveld is up for auction. 
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The 52-room Fortis Hotel Malaga in the foothills of the Drakensberg Mountains will be auctioned later this month, offering an investment opportunity for the right entrepreneur in the hospitality industry.

According to Marc Kessel, senior broker at Broll Auctions and Sales, the hotel – selling as a going concern on 32 hectares of land – is a “rare gem offering incredible value for the right buyer”.

He said: “We are seeing new entrants into various industries, including hotel groups and investment consortiums, who are looking to take advantage of the value on offer. The opportunity through the pandemic is that the situation has altered corporate strategy and welcomed a new way of thinking, opening new networks and reaching different sectors across multiple platforms.”  

The trend of owners selling started last year when flights and bookings were cancelled and it did not seem to be letting up, he noted. South Africa’s current record low interest rates combined with investors who had accumulated capital in anticipation of distressed hotels, could result in hotels selling for better pricing than expected.

“In recent months, the number of properties coming to market has increased, as sellers become more realistic in their pricing. Transactions are reflecting slight discounts, but the pricing gap between buyers expecting discounts and sellers willing to offer them appears to be closing.”

Fedhasa national chairperson, Rosemary Anderson, said it would be a struggle to find anyone in tourism or hospitality not negatively affected by the pandemic. “The extent varies, however, from incomes being reduced to zero (some hotels have been closed since March 2020), to restaurants, hotels and other hospitality businesses being able to reach near pre-pandemic levels for some of the months when they have been able to trade with restrictions that allow them to be financially viable.”

Marc anticipated seeing even more hospitality establishments coming up for sale in the next few months. “Besides being in lockdown, the reincarnation needed for brands to kick-start the offering could be financially tricky and cost intensive. It may very well be an alternative to rethink strategy.”

Additional opportunities to superimpose on the hospitality industry were largely geared towards the medical fraternity, spanning towards frail-care, rehabilitation and also training centres and schools, he told Travel News.    

The virtual auction, at noon on July 29, includes a mix of retail, commercial and residential properties as well as vacant land. The Savoy Guesthouse in Sandton, suitable for corporate and leisure stays, will also be on offer.  

“Participants must register online in advance and pay the R50 000 deposit,” advised Marc. “There has been a lot of interest from a mix of private individuals and companies in the hospitality sector. The opening bid for the Fortis Hotel Malaga will be around R5m.”

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