The African Sun hotel group is set to move out of the Kingdom Hotel in Victoria Falls next month after failing to agree with the landlord over new lease tenure.
Africa Sun Chief Executive Officer, Peter Saungweme announced the development in a statement that he issued to the group’s stakeholders last week.
“Further to the formal announcement, which African Sun Limited (African Sun) released to the market on 4 July 2022, we would like to inform you that the Kingdom at Victoria Falls Hotel shall be closing for business with effect from 5 January 2023,” read part of Saungweme’s statement.
Saungweme explained that the hotel group failed to agree with the hotel property owner, Makasa Sun over lease tenure. African Sun successfully tendered to lease the hotel in 2021 but negotiations over lease terms continued into 2022.
“However, despite this success, a mutually agreeable lease tenure could not be reached, with the landlord only willing to offer a lease of two years against the group’s ask of tenure of at least ten years in its tender.
The ten-year lease tenure was and is still considered as being the minimum the company would need to recoup and realise a return from its envisaged investment in the hotel. The decision to exit the hotel has not been an easy one for the board, but was necessary and unavoidable to protect shareholder value in the circumstances.”
African Sun has been leasing the 294-room hotel since 1997. Part of the tender requirement included roping in an international hotel brand and rebranding the hotel. The hotel group intended to bring in the British multinational hospitality company, the Intercontinental Hotels Group (IHG) and invest US$6.5 million in rebranding the hotel over 10 years.
First Capital Bank owns 50 percent of Makasa Sun while the Barclays Pension Fund owns the remainder.
