Picture: THINKSTOCK
Picture: THINKSTOCK

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LISTED hotel and casino operator Tsogo Sun on Wednesday said it had committed $100m (R920m) towards the group’s hotel expansion in the rest of Africa, through the expansion of its hotel in Maputo and an acquisition in Nigeria.

This brings the value of Tsogo Sun’s various investment projects under way to about R2.6bn.

The group said it would invest $30m into the expansion of its Southern Sun Maputo hotel in Mozambique, involving a complete refurbishment of the existing 158-room hotel.

In addition to refurbishing rooms, public areas and expanding the restaurant, 110 hotel rooms and new conferencing facilities would be added.

Tsogo Sun CEO Marcel von Aulock said the hotel had been trading "very well", and had seen high occupancies, "so we want to expand the product".

Subject to conditions including regulatory approvals, the group would also acquire a 75% stake in Ikoyi Hotels — the holding company of the Southern Sun Ikoyi hotel in Lagos, Nigeria.

Tsogo Sun has managed the hotel for the original developers since it opened in 2009. The group said investment, including loan funding, was about $70m.

Mr von Aulock said the 195-room hotel, which had additional land available for future expansion, "gives us a nice base in Nigeria to grow from". He said the acquisition suited Tsogo Sun’s preference to own the properties it managed and this was "an opportunity to acquire the property and run it for our own account — very similar to what we’ve done with acquisitions in South Africa".

Acquiring hotels in Africa which the group already managed was also less risky than acquiring other hotels, he said.

Tsogo Sun operates hotels in six African countries outside of South Africa, namely Mozambique, Zambia, Tanzania, Kenya, Nigeria and the Seychelles.

He said Africa, which was "part of our natural expansion", was already an important region for Tsogo Sun, providing about 15% of its hotel earnings.

Two weeks ago, Tsogo Sun announced expansion plans for its three Gauteng casino operations, with a committed spending of R900m. The group is investing R220m into the refurbishment, consolidation and relaunch of the Southern Sun Elangeni and Southern Sun North Beach hotels into one complex — Southern Sun Elangeni and Maharani. It is also spending R200m on expanding its Emnotweni casino in Nelspruit and is acquiring the remaining minority shareholdings in Suncoast casino for R400m.

The two new investments of $100m would be funded through existing offshore cash and new dollar-based borrowing facilities.