Western Cape Business News

Send  Share  RSS  Twitter  25 Mar 2010

HOSPITALITY: Queensgate Gets Red-Carded


Recent Western Cape Business News

IT seems CBN’s cynical ruminations around hotel and leisure services company Queensgate were not exactly amiss.

Our article asked why the Queensgate share price had collapsed of late despite the company being fundamentally and geographically well positioned for the Soccer World Cup bonanza. No sooner had our article been published than the first real indications of trouble at Queensgate started hitting the headlines in the travel and leisure industry.

Some reports suggested Queensgate was facing serious financial trouble, prompting the company to advise shareholders that the allegations in these industry reports would be investigated.

In CBN’s previous article we pointed out that Queensgate’s portfolio was arguably well positioned to catch the droves of soccer tourists to the city – most notably its association via a “controlling interest” with the Radisson Hotel, the luxury venue adjacent to the Green Point stadium.

Other hotels claimed in Queensgate’s portfolio include the Hollow on the Square, the Park Inn, the Avenue Hotel the(Fish Hoek) and the Alphen Hotel (Constantia).

Recently Queensgate also took over the operations of the recently finished Shelley Point Hotel and the Rockwell All Suite Hotel in De Waterkant.

It now turns out – and at the time of going to press no ‘official’ detailed announcement had been made – that Queensgate may have lost its grip on the Radisson.

With just months to go to the Soccer World Cup that could be a costly penalty for Queensgate.

At the end of February Queensgate did release a statement advising that certain leases held by the Queensgate Holdings - an associate company - had been cancelled during the course of January and February this year. No details were provided, but Queensgate did indicate that a ‘steering committee’ had been convened to determine the financial impact on Queensgate.

A little more intriguing, though is recent correspondence from the Rezidor Hotel Group, which has been at pains to stress that it is still very successfully operating the Radisson. Rezidor has pointed out that Queensgate’s principal involvement with the hotel revolved around the leasing 92 of the property’s 177 units from Hospitality Property Fund (HPF).

The Rezidor Hotel Group, which has extended its agreement with the Radisson until 2029, says the Queensgate lease recently came to an end.

It seems HPF cancelled that lease agreement – although the reason for the cancellation is not entirely clear at this point. The lease cancellation appeared to coincide with an issue of Queensgate shares to HPF and another company by Queensgate directors – Holger Friedrichsen and CEO Andrew Hubbard.

The shares were purportedly used as security for the lease agreement.

It would also seem that Frierichsen and Hubbard have been diplomatically elbowed out of the boardroom. Colin Human, the current non-executive chairman of Queensgate, has been appointed on an interim basis, as the executive chairman of Queensgate with immediate effect. Deon van Rooyen has also been appointed on an interim basis as an executive strategic director (acting as the financial director) of Queensgate also with immediate effect.

While there have been changes to the Queensgate boardroom, the company’s website, curiously, shows no changes to its hotel portfolio – listing the Radisson as prominently as ever.

Queensgate shares, which were ranging between 3c to 4c when our last article was written, have now settled in a range between 1c and 2c. Clearly the market is fearing the worst…

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