Our business model

Resources and relationships – the six capitals


We invest the financial capital received from our equity investors and debt funders.

  • 26% LTV ratio (2019: 16%)
  • Rental income of R768 million (2019: R828 million)
  • R220 million invested in capital expenditure (2019: R212 million)
  • R2.55 billion in debt (62% hedged) (2019: R1.9 billion)
Social and relationship

The strength of our relationships is key to our business, given the unique nature of our operations. We establish and maintain mutually beneficial relationships with tenants and their management companies.

  • 100%* tenant retention rate
  • Strong, mutually beneficial relationship with Tsogo Sun Hotels, the majority shareholder of the Fund

Our diverse and carefully managed property portfolio enables us to generate income.

  • 54 (2019: 53) hotel and resort properties across multiple grades and geographic locations, valued at R10 billion (2019: R12 billion)
  • Focused on metropolitan cities for scale

Although we rely on water and electricity provided by municipalities to our operations, we strive to be resource and self-sufficient where possible.

  • Desalination plant and/or filtration plants at several of our Cape Town hotels
  • Water and energy-saving initiatives implemented at all our hotels

The depth of our experience in the hotel industry coupled with the strength of our hotel brands are critical to our ability to grow the business.

  • Average experience of executive and senior management team in the hotel industry is 16 years
  • 15* international and domestic brands (2019: 15)
  • Ongoing investment in internal systems and processes to build data analytic capability

To deliver on our strategy, we have a highly specialised and experienced team.

  • 10 employees (2019: 19)
  • Access to specialised Group services, such as information technology (‘IT’), human resources and risk management through our majority shareholder, Tsogo Sun Hotels

^ The impact of Covid-19 on the hospitality industry, the Company and its financial capital, as well as the measures taken to reduce the impact and to ensure Hospitality remains sustainable, is set out in the Financial Director’s (‘FD’) review.
* Subsequent to year end, the Protea Hotel Edward lease expired on 30 June 2020. The tenants of Protea Hotel Hazyview and Mount Grace Country House and Spa, being separate operating companies owned by Marriott International Inc., terminated their lease agreements with Hospitality. These hotels will be operated by Tsogo Sun Hotels, under management agreements when they reopen.


Core business activities and processes

The hotel portfolio of well-located and appropriately branded hotels caters to a wide range of domestic and international target markets including business travel, leisure and conferencing clients.

Invest   Acquire properties in key locations with good visibility,
accessibility and proximity to major hubs
Capitalise   Maintain properties to appropriate brand standards and
expand where opportunities meet our investment criteria
Lease   Lease properties to tenants associated with hotel brands
across the classes of hotels
Enhance   Enhance relationships with tenants and their hotel
management companies to maximise rental income
Review   Strategic disposal of non-core assets

Support processes

Strategy implementation
Capital allocation
Product relevance
Acquisitions and development
Financial reporting and taxation
Risk management
Regulatory compliance
Procurement management


Outputs – products and services delivered

Attractive, well-located, maintained and resilient properties
Capital funding for hotel maintenance and improvements
Hotel management skills and advice to enhance hotel performance
REIT investment product


  • Outcomes
  • Our purpose – to invest in quality properties in the South African hospitality industry

    Our definition of value – to deliver sustainable returns to our shareholders through distributions and capital appreciation, while positively contributing to our employees, business partners and the economy

We do this by sustaining, optimising and growing value through our strategic objectives and initiatives:


Financial strength and durability

Maintain an appropriate capital structure and distribution policy to ensure the business survives through the economic cycles

Product relevance

Own and maintain a variety of quality properties that are relevant in their markets


Property portfolio management

Optimise operational efficiencies and grow rental income through effective contract management and robust tenant relationships

Business intelligence

Continue to refine internal processes and systems to support portfolio management and decision-making


Organic growth

Grow our portfolio through organic means


Continue to seek value-enhancing acquisitions, both through platform transactions and single-asset acquisitions that are well diversified both geographically and across brand segments