Durban’s Golden Mile may lose premium hotels to ‘new hoteliers’ as city leases come to an end

The Durban beachfront could lose two premier hotels that have been operated by Tsogo Sun for many years, after the eThekwini Municipality announced that it was looking to give opportunities to “new hoteliers” to manage these facilities.

The lease for the city building used to operate the Maharani and Elangeni hotels is coming up for renewal, and the City is planning to give opportunities to other individuals to manage them. The City revealed recently that it was planning to issue a public tender to solicit new bids from those interested in managing the buildings after its negotiations with Tsogo Sun, which had a long lease on the properties, hit a brick wall.

Since the City owns the land and the buildings in which the hotels are operated, should public contracts be won by anyone other than Tsogo Sun, the hotels would have to change their names in line with the new operators. Reacting to the possible change, opposition parties described it as a serious concern, saying Tsogo Sun was a well-known and trusted business brand, and a new name could fail to attract bookings.

They said these two hotels were located close to the beach and were central to the city’s tourism industry. A report on the matter said the current lease was due to expire on December 31, 2025. It calls on the city council to authorise the accounting officer to conduct a public participation process regarding the proposed granting of long-term rights to use, control or manage the Elangeni and Maharani North Beach hotels.

Before the municipality can start a bidding process, it needs to conduct a public participation process on the issue. The report said the municipality had engaged with Tsogo Sun, which submitted various proposals to extend its long-term leases on their expiry. However, there was an impasse on the basis that Tsogo Sun’s various rental offers were deemed unacceptable by the municipality.

It said Tsogo Sun’s offers did not represent the market value. The municipality, said the report, is constrained by the Municipal Finance Management Act and Municipal Asset Transfer regulation to lease at a fair market value. It is also constrained by the eThekwini Municipal Supply Chain Management Act, which states that the disposal or alienation of assets must ensure that immovable property is alienated at market-related values, except when there was public interest or plight of the poor demand.

It said it had deemed it necessary to go out on a competitive bidding process to meet this requirement. “The municipality has extensively considered various options and the relevant legal framework requirements for granting the proposed long-term rights, and believes that a competitive bid process is deemed the preferred method,” it said. Prior to commencing a competitive process, read the report, legislation required that it conduct a public participation process given that the market value of the assets was greater than R10 million.

But opposition parties were lukewarm to the idea of a public tender, saying it could not risk further damage to the tourism industry. DA councillor Nicole Graham said they were not briefed on the discussions between the city and Tsogo Sun. “If you are going to say they (Tsogo) are not offering enough, explain what they are offering; these are public buildings,” she said. “I also think that we are in a precarious position with the city’s tourism industry, and those two hotels are the mainstay of the city’s tourism industry. We have a lot of hotels facing difficulty and having to move north.

“It is important that there are luxury hotel offerings in Durban to maintain what is happening here. We believe there should be a more collegiate relationship with (Tsogo Sun) and we do not agree with how this is being handled,” she said. IFP councillor Mdu Nkosi said the City needed to engage with Tsogo Sun and find a solution, as competitive bidding could give the properties to unknown people who might not be able to manage them as well.

“Tsogo Sun is a big name that people trust. It will not serve the city well to have buildings that are not doing anything because the service at the hotels will not be the same,” Nkosi said. Municipal spokesperson Msawakhe Mayisela said the city’s way forward was “to lease the property through an open, fair, transparent and competitive process”.

Tsogo Sun had not responded to requests for comment at the time of publication.