Hotel company not ‘entitled’ to accommodation management tender

A hotel company’s litigation matter against Cape Peninsula University of Technology (CPUT) failed in the Western Cape High Court last week.

Having conducted a hotel business at its property in District Six, Ma-Afrika Hotels sold its property to CPUT and after the sale they continued to administer the property, mainly as a residence for students enrolled at CPUT but also as a hotel. The majority of the apartments at the hotel are used for student accommodation for 10 months of the year and the rest for hotel purposes.

The apartments ordinarily used for student residential purposes are made available to supplement the hotel’s accommodation during the time that they are not required for housing the students. As the time neared for Ma-Afrika’s lease to expire CPUT advertised a request for proposals in respect of the future administration of the property. CPUT’s primary interest in this regard was the continued operation of the premises for student accommodation.

A tender, for a ten-year period, was awarded to Baobab Hospitality after it was one of three shortlisted applicants - one of the other tender applicants was Ma-Afrika Hotels.

Judgment, handed down by Judge Ashley Binns-Ward, read: “After learning that Baobab had been awarded the tender, (Ma-Afrika Hotels) investigated the possibility of concluding a business partnership with that company. Its investigations turned up that Baobab did not appear to have met the qualifying criteria for the tender contract as it did not have the required experience or a binding contractual relationship with an established hotel group.

Baobab’s representation to the CPUT that it had such a contractual relationship had been the basis upon which it had been considered as qualified to undertake the tender contract. “CPUT came to appreciate the difficulty with Baobab’s tender only when the applicant drew the facts to its attention during December 2021. At that stage the CPUT had yet to conclude the contemplated contract with Baobab,” judgment read.

Litigation by Ma-Afrika Hotels included seeking an interdict against CPUT concluding a contract with Baobab. CPUT eventually rescinded the tender award for Baobab and Ma-Afrika Hotels had taken the view that as the only properly qualifying tenderer it was entitled to be awarded the tender contract. CPUT decided, however, to put out a fresh tender invitation. Judge Binns-Ward said: “The applicant did not have a right to be awarded the contract when the award to Baobab was rescinded.

The mere fact that the applicant’s tender was the only acceptable one out of the two that were submitted does not, by itself, establish that the CPUT’s election to choose one of the contractually reserved options to cancel the tender rather than awarding the contract to the applicant was irrational. Provided that it acted reasonably in the circumstances, CPUT was entitled rather to cancel the tender and proceed with the intended procurement in terms of a fresh procedure.”

CPUT spokesperson Lauren Kansley said they were not able to respond on Sunday. Enquiries to Ma-Afrika Hotels were not answered by deadline by Sunday.