Capital challenges ‘lazy’ hospitality industry with hybrid 'disruptor'
Property entrepreneur Marc Wachsberger is launching a hotel, apartment and conferencing hybrid which he says will compete with a “lazy” hospitality industry and take market share away from conferencing king Sandton Convention Centre.
Almost no hotels have been built in the country since 2010, but Wachsberger, CEO of The Capital Hotels and Apartments group, has been working on his flagship R500m corporate traveller property.
The Capital On The Park, on Katherine Street in Sandton, opens in April and Wachsberger argues that its mix of residential and hotel rooms with shared management services means it can compete with old corporate hotels as well as house-share service Airbnb.
“The hotel industry has been very lazy for many years and it has been ripe for disruption. Basically in the old model, people including corporate workers paid set daily rates that included all kinds of extras that they rarely used. For example, I know of hotels that offer turn-down services but they have not had a request for them in like a decade,” Wachsberger said.
In 2008, when The Capital Hotels and Apartments group was launched, “we worked out we could charge much less, say 25% what old traditional hotels do, by offering simpler hotel rooms and services which tend to be what business travellers actually want”.
Since then he and his team have built various corporate hotels that include residential portions. By having traditional hotel rooms, owner-occupied apartments as well as people who bought apartments within each development and rented them back to Capital, Wachsberger said profitability could be maintained. He was not constrained by seasonal effects as much as traditional hotels were.
“If the hotel portion has a weak month, the development is supported by the residential portion. It allows us to mitigate risks and effectively we have a sustainable market which appeals to consultants and long-stay professionals,” he said.
Capital’s revenue growth over the past year was 120%, making it the fastest-growing hotel brand in SA.
The Capital On The Park offers standard rooms, studio apartments and penthouses. It also has flexible apartments with one room or two. A key to Capital’s model has been its flexible room rate system.
“We have a team of 50 people in our head office using an advanced algorithm-based revenue management system,” Wachsberger said.
Capital owns one-third of the building outright. The other two-thirds were pre-sold.