Zimbabwe's Rainbow Tourism Group invests R100 million in Cape Town hotel acquisition

Tawanda Karombo

Zimbabwe-listed hotelier, Rainbow Tourism Group (RTG), is expanding into South Africa with the $5.6 million (nealry R100 million) acquisition of a Cape Town commercial property that it intends to turn into a prime hotel.

RTG, which runs city and resort hotels in Zimbabwe, said on Thursday that it was in the process of finalising a strategic acquisition in Cape Town through its South African-registered subsidiary, Rainbow Tourism Group (SA).

RTG SA has entered into a sale and purchase agreement with Elleke Hospitality for this acquisition. Under the agreement, RTG will acquire the seven-storey commercial property located along Buitengracht Street in Cape Town.

“The property which is currently a commercial asset, will undergo adaptive reuse and refurbishment to transform it into a branded hotel operated under a leading international hospitality group,” said Tapiwa Mari, RTG company secretary.

“The total consideration for the acquisition is roughly 9.3% of the company’s market capitalisation on the Zimbabwe Stock Exchange (ZSE).”

RTG said the acquisition of the Cape Town property and its development into a branded hotel was in alignment with the board’s overarching mandate to identify and pursue growth opportunities that support the company’s long-term vision of expansion.

“To ensure world-class delivery, the Company is presently in advanced discussions with reputable international hotel brands to secure a management agreement for the acquired property,” explained Mari.

“Partnering with a global operator is expected to drive international skills transfer, operational efficiency, and increased visibility of the RTG brand on the global stage.” 

The redevelopment of the property into a modern, fully operational hotel will be consistent with international hospitality standards guided by the specifications and brand standards of the selected global hotel partner.

This will ensure that “the final product meets world-class benchmarks in design, guest experience, and service” delivery.

RTG plans the Cape Town hotel to stand as a competitive and high-impact asset within Cape Town’s hospitality landscape.

To finance the acquisition, RTG has secured $6m loan facility from a Zimbabwean finance institution at terms it said were consistent with its existing borrowing arrangements. The loan facility carries a fixed interest rate of 12.5% per annum with a tenure of five years.

On drawdown, the loan facility is expected to raise RTG’s gearing ratio from 9% as at the end of 2024 to approximately 32% post the transaction.

With a premium location along a major arterial route leading into Cape Town’s Central Business District (CBD) and offering high visibility and pedestrian traffic, the acquisition property has close proximity to key business and leisure landmarks such as including the V&A Waterfront, Cape Town International Convention Centre (CTICC), the DHL Cape Town Stadium and the Bo-Kaap tourist district.

“This premium location positions the property as an ideal candidate for conversion into a hotel development that caters to both corporate and leisure travellers,” noted Mari.

“Its proximity to the CTICC enhances its suitability for the Meetings, Incentives Conferences, and Exhibitions (MICE) segment, while the surrounding cultural, culinary, and recreational attractions boost its appeal to domestic and international tourists alike.” 

The Cape Town acquisition “presents an opportunity to diversify both the Group’s balance sheet and revenue streams by establishing a presence in one of Africa’s most vibrant and competitive tourism” markets.

Cape Town is a globally acclaimed destination and a key hospitality hub offering strong market fundamentals, including high occupancy rates, well-developed infrastructure, and year-round international visitor appeal. 

Mari said establishing a footprint in this environment not only enhances RTG’s regional and global profile but also provides direct access to global best practices in hospitality operations, customer experience, and service excellence.

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