Century City’s newest hotel investment off to a good start as occupancies recover

Century City’s Bridgewater Hotel in Cape Town. Image: Moneyweb

Century City’s Bridgewater Hotel is the newest addition to the Rabie Property Group’s 250-hectare mixed-use estate and, as the new kid on the block, the hotel has already started showing impressive occupancy rates – said to be up to 70% in its first two months of operation.

The 80-room hotel located in Cape Town’s Century City was built on a R125 million budget – about R1.6 million per key – and is expected to see its occupancy levels average around 60% within the first year of opening its doors.

“Occupancy for the first two-and-a-half months has been up to 70%, which is phenomenal for a new hotel,” Century City Conference Centre and Hotel joint CEO Gary Koetser tells Moneyweb, adding that it normally takes about two years to reach that kind of occupancy.

“Sure, it’s only been for two-and-a-half months [and] annualised we’re not going to achieve that … We’re probably heading towards about a 55% to 60% mark, but again, that’s very good for a brand new hotel.”

Addressing conferencing bed shortage

According to Koetser, the decision to build the Bridgewater Hotel in 2019 was informed by an intensifying accommodation shortage that came about as a result of the success of the Century City Conference Centre, which anchors the mini-city as a corporate node and is a key driver of business to the city.

The Urban Square Hotel – formerly known as the Century City Hotel, which was built seven years ago with the capacity of 125 rooms – along with other hotels in the precinct could not service the accommodation demands of visitors to the area.

“We were starting to lose conferences because we didn’t have enough accommodation in the area,” Koetser notes.

“People would book our conference for 500 to 700 people but we didn’t have enough accommodation in the area.”

Pandemic impact: downside – and upside

Businesses in the hospitality industry were all hard-hit by the Covid-19 pandemic and consequent lockdown regulations, as restrictions saw restaurants, hotels and the greater tourism sector largely closing their doors, resulting in huge revenue losses.

For the Century City development, the pandemic presented yet another threat to its revenue stream in the form of virtual functions.

In the past two years, employers and employees have had to acclimatise to not only working remotely but to hosting functions and conferences on virtual platforms such as Zoom, Teams and Google Meet.

However, with the world opening up, it appears the pandemic has not been all doom and gloom for the city: it seems the Covid-19 bubble phenomenon has assisted the company’s recovery.

Koetser explains: “Many of those large conferences that used to be [for] 2 000 to 3 000 people … companies don’t have the affordability anymore … where they used to take 3 000 people away, they might only do 700 now.

“So all that conferencing, which would normally go to the bigger venues, is coming here.”

“It’s a whole new market for us [in terms] of conferences that were too big for us historically, but they’re now the right size for us.”

Greenlighting of Delta deal crucial

International travel bans restricting air travel to South Africa also negatively impacted the business. US airline Delta Air Lines earlier this year announced its plans to operate direct flights between Atlanta and Cape Town, but these efforts seem to have been met with a sluggish response from the country’s transport ministry.

In March, the province launched an inter-governmental dispute with the Department of Transport.

Speaking at the hotel launch on Thursday (March 31), Western Cape Premier Alan Winde reiterated the Western Cape government’s commitment to take the department to task for its lack of action on the matter.

“We will keep pushing that market and keep working with you [Delta Air Lines] on our airlift strategy between the city and the province, a great partnership, where we have actually focused on the last two years on growing direct flights to this region,” said Winde.

“We know that that is the lifeblood of tourism, of conferencing, of foreign direct investment, of attracting people to this region because they want connectivity to this world. We will continue pushing as hard as we can.”

Pricing below Covid-19 levels

Despite gaining significant foot traffic, Century City notes that its room rates remain below pre-Covid-19 levels and that pricing is still demand-dependent.

With pricing, we are “slightly down on pre-Covid-19 levels, but not massively”, says Koetser.

“One thing we’ve tried to do is to maintain our rates, but it’s all demand based [and] in certain times there’s nothing happening.

“We know what the forward books look like from a forecast point of view on the conference centre side, so we’re able to change our rates daily in line with what’s happening in Century City, what’s happening in Cape Town, any special events, and certainly what’s happening in the conference centre.”

Investment opportunities

With early signs indicating a steady recovery for the hospitality sector, the company says it now looks to explore investment growth in the luxury retirement industry as it has seen a rise in demand for this in the country.

“There are a lot of people in South Africa that have got money, that can’t leave, or their kids have left, and their kids are saying: I want to put mom and dad somewhere where it’s safe and where there’s medical.”

Koetser goes on to say that the company is looking to build its next luxury retirement village where the amusement park Ratanga Junction used to be located within the Century City precinct.