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Hospitality sector plan a unique funding initiative

by Lesotho Times
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Tsitsi Matope

TEBOHO Mahase and his wife, Tlalane, could this week not believe Lakeside Hotel is the same establishment they stayed in two years ago when they decided to take a getaway holiday to revive their marriage.
The couple had travelled from their home in Leribe, just to reflect on their marriage and enjoy the city life away from their family.
This time around, they decided to return and again enjoy the fantastic view of Robert Dam and relive what they called, was the magic that saved their crumbling marriage.
Lakeside Hotel is located in the Mohalalitoe/Motimposo neighbourhood, right in the middle of other businesses.
The hotel shows immense potential to develop into a first-class facility and boasts of one of the best views across the nearby Robert Dam.

It was the sound of chirping birds and a lovely view that had then attracted the Mahase couple and today the singing birds are a reminder of how their visit two years ago brought them closer.
“We are surprised to see the fantastic changes in our current room. Unlike in the previous room we stayed during our last visit here two years ago, we are happy about all the new amenities in this room,” Mrs Mahase said.
“The shower is now modern and the walls and ceiling are new. They really give that refreshing atmosphere,” Mr Mahase said, adding although they had to pay more than double the rate they paid in 2012, the comfort was worth the expense.

The Mahases’ were speaking during a visit to the hotel on Tuesday this week by members of the Lesotho Tourism Development Corporation (LTDC) Star Grading Committee, some senior officials from the tourism-promotion body and representatives of the Private Sector Competitiveness and Economic Diversification Project (PSCP).
The PSCP, which is funded by the World Bank, has been supporting the designing and implementation of the Hospitality Star Grading System since the launch of the project in 2007.

However, the couple’s sentiments came as no surprise to the Lakeside staff, who said they had now become used to the pleasantries by every guest staying in the famous Room 42 of the hotel.
“We just wish the hotel management could upgrade all the rooms to the Room 42 standard. It would make our clients very happy,” one of the workers said.
Out of the 54 rooms at the hotel, the corner room, which is Room 42, is the only one that was recently upgraded.
This was made possible by the LTDC’s Grading Awards Committee members, who had approached various companies for sponsorship to facilitate the development.
The sponsoring companies sell building and interior and exterior design material.
A lot of high-quality carpentry works were also put into the renovations, which transformed the room into a luxurious suite — a far cry from its original outlook.
The makeover started with the installation of new doors leading into the room and bathroom.
Also changed were the ceiling, fitted wardrobe, cupboards, lamps, floor, bed and bedding, curtains, chairs and flat screen television (TV) set.

According to Mr Theodore Ntlatlapa, who is a member of the Grading Committee, the innovation was inspired by the understanding that upgrading the rooms would help transform the appearance of the spaces and also attract more business.
Apart from the demonstration, the committee also came up with an idea to make it easy for operators to access finance for the required upgrades since all ungraded establishments are expected to make certain makeovers.
However, Mr Ntlatlapa said the excitement shown by the accommodation sector about the grading system the majority of operators were struggling to meet the requirements.
“It is against this background that we proposed an idea to design a private equity financing programme to help operators access funding that would enable the upgrading of their establishments.
At the same time, we wanted to show the operators what they can expect after they have utilised the funding through our design concept.
We tested our model on the room at Lakeside Hotel” Mr Ntlatlapa said.

If successful, the financing programme would be run in partnership with the LTDC, the hoteliers and some financial institutions willing to enter into partnership with the operators.
Mr Ntlatlapa said the plan is to nationally roll-out the financing programme and make sure standards at all accommodation establishments are improved.
“The design of this programme will be based on the number of guestrooms in the country.
“What this means is that the major financier we are negotiating with is interested in partnering with all the hospitality establishments in the country and would like to upgrade all guestrooms,” Mr Ntlatlapa said.
“If all goes according to our plan, we are expecting beneficiaries to have fully paid back the loans in seven years.”

Mr Ntlatlapa further explained that, the idea to push for enhanced participation in the upgrading of establishments followed a realisation that many operators were finding it costly to attain desired grading standards which also respond to the targeted market.

Since the launch of the implementation of the star-grading system in August last year, only seven, out of the 176 registered accommodation establishments countrywide have been graded.
According to the new Regional Tourism Organisation of Southern Africa (RETOSA)’s stipulation on the new regional harmonised grading standards, the deadline for all establishments to comply with the new requirement is 2016.
In the new concept, RETOSA brings together the 14 fascinating countries of the southern part of Africa — Angola, Botswana, Democratic Republic of the Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, South Africa, Swaziland, Tanzania, Zambia, and Zimbabwe, to offer a unique opportunity to discover the natural wonder, splendor and unique spirit of the region.

However Mr Ntlatlapa said because of the need for all countries in the region to adopt new harmonised accommodation standards, efforts would be made to ensure the country’s entire hospitality sector is on board with the rest of the region.
Mr Ntlatlapa further said the decision to upgrade a room at the Lakeside Hotel was meant to demonstrate to operators that such developments can be done.
“This was also another way to help us sell the financing idea that would help us to stimulate the acceleration of the grading process.”
Mr Ntlatlapa urged operators to visit the famous Room 42 and see how it was transformed using local material and skills.

The new-look, both inside and outside, cost nearly M100 000 and Mr Ntlatlapa said for all the rooms, Lakeside Hotel would need to invest up to M6 million and an extra cost for other interior facilities and exterior works, which include taking care of the brickwork appearance and landscaping.
“According to the programme model we have designed, with well-focused management, establishments can afford to pay back their loans.
“The annual bed occupancy in Maseru alone is 28 percent and this generally means each room is valued at M70 000 per year.
“However, after the upgrades, we expect a significant increase in rates, a boost in the number of days spent by tourists and an increase in the occupancy levels depending on aspects such as location and services provided.
“This is evident from the ability by Lakeside to charge double for the upgraded room.”
He said while some operators were expected to be hesitant to participate in the programme, the benefits would be immediate and significant to turn around their businesses.
“Unless all operators move in the grading direction, we do see the businesses of those left behind suffering in the near future.
“It would be difficult for ungraded establishments to market themselves in a sector where tourists would immediately know what services to expect in graded facilities.”
He further said graded establishments had already started enjoying the benefits.
“Their occupancy levels and rates per night have increased such that some are extending their facilities to cope with the huge demand.
“They are also receiving, for the first time, more holidaymakers from other countries.”
Mr Ntlatlapa also said since the awards-grading committee started working closely with the operators, they noticed how many tourists were willing to pay more for comfort and excellent service.
“That is why we emphasise the importance of standards in the hospitality sector.
“It is only through grading and continued assessments that we can ensure the sustainability of that comfort and excellent service,” he said.

In an interview on the sidelines of the tour, the LTDC’s Investment Promotion Manager, Mamello Morojele said the corporation remains committed to the implementation of the star grading initiative.
“We have among other efforts employed a Grading and Quality Assurance Officer to attend to all private sector issues and concerns.
“This is also to ensure there is an increased participation in grading.

However, Morojele said although they are getting good feedback from the graded establishments, which they are sharing with ungraded operators, they are also concerned that the sector was generally facing problems to upgrade their establishments for grading.
“Although we have noticed that the appetite to be graded is high, some operators are doing the upgrades in phases because they cannot afford making comprehensive and timely makeovers,” Ms Morojele said.
She said the slow development pace was dampening the spirits of other stakeholders committed to the star-grading system.
“We are, therefore, excited about the private equity financing idea, which we hope will soon take off and help to stimulate the hospitality sector,” she said.

Ms Morojele further said the corporation was at the forefront of supporting and marketing the financing partnership.
“We have some operators who have already bought into the idea and we do not see why it should not be actualised and take off as soon as possible.”
She urged all interested operators, particularly those with ungraded establishments, to visit and view the upgraded room at Lakeside Hotel.
“We want them to see the transformation we are talking about and also get to appreciate the standards we are preaching.”

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