Meikles Limited says it has agreed to sell-off its flagship Meikles Hotel to ASB Hospitality Zimbabwe, a subsidiary of the Dubai based Albwardy Investment for US$20 million.
The 312-bed five-star hotel has been impacted by low occupancy rates and lack of investment in refurbishment and back of house services. Albwardy Investment is a firm involved in a range of business sectors from food distribution and retail, construction, shipyards, and hospitality.
“The consideration for the Transaction will be US$20 million. The Transaction qualifies as a Category 1 classification and requires shareholder approval in a General Meeting scheduled to take place on 13 December 2019 in Harare, Zimbabwe,” Meikles Limited, in statement on Friday announced.
“The Meikles Hotel has over the past two decades been impacted by relatively low occupancy rates and a subsequent lack of investment in refurbishment and back of house services. In order for the Hotel to compete with other leading hotels in southern Africa, foreign currency denominated long-term capital, the scale of which cannot be provided by Meikles is needed.”
Meikles Limited said the investment would finance the modernisation of the whole operation, as well as general infrastructure improvements, which they hoped would restore it to international Five-Star standards.
“Meikles will seek to generate further value in its remaining assets through the re-investment of the proceeds from the Transaction in the agriculture and hospitality segments of the Group’s other businesses,” part of the Meikles Limited statement read.
The low occupancy rates and a subsequent lack of investment in refurbishment and back of house services are largely due to the continued downturn of the economy.
In regards, to its low occupancy rates, rising hotel charges against shrinking disposable income have left many unable to afford staying at the iconic hotel that was established in 1915.
Concerning the lack of investment, the current political climate in the country has increased the risk of doing business in Zimbabwe which continues to deter investors.
Commenting on the disposal, executive chairman of Meikles, John Moxon said the acquisition of the Meikles Hotel by Albwardy Investment was a win-win for all stakeholders.
“The Group’s financial position is further strengthened and allows Meikles to invest in its broader business portfolio, whilst the entrance of a leading global hotel and hospitality group of the calibre of Albwardy Investment provides security and long-term sustainability for Zimbabwe as a growing regional hub for tourism and business,” he said.
Albwardy Investment’s hospitality portfolio Director, Laurie Ward added the Meikles Hotel provided a unique opportunity to invest in Zimbabwe’s leisure and business markets as a first mover.
“The refurbishment of this strategic asset will bring much needed investment into Harare and profile both the city and country on the international stag,” he said.