Hotel minting it in mining town

Hotel minting it in mining town

A hotel company that would use minimalist and cutting edge designs

If you have never heard of the Northern Cape town of Kathu, you are not alone. But give it a few more years and it will be one of those featured prominently on the South African map. This is because in the last few years it has become a bustling place filled with promise and optimism, all thanks to the Sishen mine – owned by Kumba Iron Ore – just five kilometres away.

And this is one of the reasons Urban Hotels decided to plant one of its newest establishments in the middle of the town – a 79-room basic service hotel with a modern spin. According to owner Beyers Myburgh, he wanted to start a hotel company that would use minimalist and cutting edge designs for its rooms and social areas. “I travel a lot and I think all the hotels look and feel the same. There is no feeling going into it. So that is how I got the idea for Urban Hotels. I wanted to create something different.”

He explains that there is a huge need for a professional hotel service in the town. Before there were only lodges and guest houses, none of which were run professionally.  When Urban Hotel opened in April 2013, it became Kathu’s first professional hotel service.

“I had never even heard of Kathu”

Myburgh opened his first Urban Hotel in Bloemfontein in 2008. It proved to be successful, particularly around the time of the football World Cup in 2010, prompting Myburgh to look into expanding his business into other towns that were similar to Bloemfontein. He wanted to avoid Johannesburg, Cape Town and Durban as there is a lot of competition there and, as Myburgh says, are over-traded. “They have a lot of rooms and not enough guests to fill them.”

Potchefstroom was one idea, but when he went to speak to an architect friend, he was pointed towards Kathu. “I told him I wanted to build a hotel in Potchefstroom and he said, ‘No, you’re going to build an Urban Hotel in Kathu.’ I said, ‘Kathu, where’s Kathu?’ I had never even heard of the place.” The architect took him to Kathu and showed him around. Myburgh was immediately drawn to the vibrancy running through the town and quickly bought a piece of land on which he planned to build the hotel.

Funding

The mine near Kathu runs the Sishen iron ore community development trust. Through it, 3% of what Kumba makes from the mine is given back to the town’s community; 70% of the fund must be invested in schools and hospitals and related services, and 30% is allocated to local investments so that when the mine is done, the community can still benefit. Urban Hotels forms part of Kumba’s investment portion of the trust. “I approached them and said, ‘This is the concept and I want to build it,’” says Myburgh.

Fortunately for him, Kumba had already assessed the viability of a hotel in Kathu. Additionally, he already owned a piece of prime land on which the hotel could be built. “I kind of gave them a solution to the problem they had.” Myburgh sought funding from the Industrial Development Corporation, which owns a 51% share in the hotel. It also helped to create permanent jobs for 24 residents of Kathu.

About 95% of the guests the hotel attracts are inbound business tourists who stay for up to two nights. The balance is leisure tourists who are usually passing through on their way to Namibia. It has also received its share of Spanish and Chinese business tourists because of the Abengoa Khi Solar One farm being built near Upington and the Sishen Mine.

Kathu growing rapidly

The name Kathu may conjure images of a small dusty town with a single road cutting through it. But visit it today, and you will find a place teeming with people and shopping centres and office parks springing up.

In the past year, Kathu has experienced explosive economic growth. And Myburgh says trends suggest progress will not stop anytime soon. He even predicts that Kathu will become as large as Upington and Kimberley. This growth is thanks to Sishen and the upgrading of the railway from the mine to the Saldanha Bay Industrial Development Zone.

Once the railway is complete, he says, Sishen will have to employ about 8 000 people, which means there is another 8 000 households. Added to that, manganese mines are popping up in areas around Kathu and Hotazel, with a railway link to the Coega Industrial Development Zone in Port Elizabeth. “In the next five years the growth is not going to stop and it will be fast. But afterwards it will reach a plateau like most other towns and grow gradually.”

Competition is good

Urban Hotels’ biggest threat is that of competition looking to take advantage of the financial boom in Kathu and according to Myburgh, other groups have already been looking around for prime land. “The problem is that land is not available everywhere in the right areas. And the land prices have skyrocketed since we got into the market.”

Yet it is not entirely a negative and Myburgh believes more competition will help grow his business as he will have to look at creative ways to attract more customers. Also, a number of lodges and guest houses have “upped their game” since Urban Hotel Kathu opened. “It is a good thing because it forces us to stay competitive.”

Future

For now, Myburgh wants to focus on developing Urban Hotels in small, rural towns across South Africa, and first up is considering opening in Upington and Postmasburg, the latter being 80 kilometres from Kathu. He believes that he can dominate this particular market as the bigger hotels are too expensive to build, which would make their room rates too high to justify building an establishment. He also wants to expand into Africa because he sees it as a market with huge developmental potential.

At present, the hotel fills to capacity between Mondays and Fridays. On the weekends it is quiet. However, Myburgh has plans to fill that gap. He is also looking into constructing 24 long staying rooms on a piece of open land beside the hotel. Each room will come with a bath, shower and a lounge area. “We get a lot of requests from people wanting to stay for two or three weeks.”

He is also thinking of adding a conference facility and a restaurant.



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