Hilton cashflow fuels Royal Swazi dream

THE Public Service Pension Fund (PSPF) says its Hilton Garden Inn investment is now “really pumping” in returns, strengthening its confidence in the commercial potential of Royal Swazi Spa.

PSPF Chief Executive Officer Masotja Vilakati said the fund began seeing returns from the Mbabane-based hotel just under five years since its opening in 2019, an investment he described as currently performing strongly.

“We are seeing the return on investment (ROI). We started seeing it after three and a half years. Now it is really pumping,” Vilakati revealed.

The performance is giving PSPF confidence as it considers the Royal Swazi Spa as another major hospitality investment, although the fund has yet to conclude an agreement with an operator for the Ezulwini property.

Vilakati said PSPF was hopeful the Royal Swazi could perform even better than the Hilton Garden Inn because of its positioning as a leisure and resort property.

“There is a lot of history with the Royal Swazi Spa and its location,” he said. He contrasted the two properties, describing the Hilton Garden Inn as primarily a business hotel, while Royal Swazi Spa is situated in a tourism and leisure environment in Ezulwini.

The Hilton Garden Inn has provided PSPF with several years of experience in the hospitality industry.

The hotel opened for business on May 1, 2019, after PSPF partnered with the Hilton Group to operate the property. It was officially opened by His Majesty King Mswati III in October 2019.

The 130-room hotel was conceived as PSPF’s major hospitality investment in the capital, with Hilton brought in to provide international hotel management expertise. Vilakati said the experience had given PSPF a better understanding of hotel operations and strengthened its ability to assess another major hospitality investment.

However, PSPF is not planning to operate Royal Swazi Spa directly. Instead, it intends to appoint an experienced operator under a management agreement. “Our model is to get someone who is experienced with the technical know-how and all that to manage it on our behalf,” Vilakati said.

The Hilton Group is currently the first operator PSPF is discussing the Royal Swazi opportunity with, but Vilakati stressed that no agreement has been reached yet. He said there were other prospective operators that had also expressed interest.

The fund is also prepared to invest in upgrading the Royal Swazi Spa, although the eventual cost would depend on discussions with the operator and the requirements identified once an agreement is reached.

Vilakati said the property in its current condition is habitable and could potentially open while renovations are carried out in phases, rather than remaining closed until all work is completed. He acknowledged that generating returns would require further investment to bring the hotel to the desired standard.

“But of course, for you to make money, you need to spend as well so that you put it to the right level. And people must not go to Royal Swazi Spa and have regrets,” he said.

For PSPF, the strategy is to build on the experience and returns from its first Hilton-backed hospitality investment while positioning Royal Swazi Spa as a potentially larger leisure-sector opportunity.

Meanwhile, Tibiyo TakaNgwane Managing Director Dr AT Dlamini has described the Hilton partnership for the Royal Swazi Spa as “good as finished”, saying he expects the hotel to reopen soon.

“This deal is concluded. And yes I have faith. I do not do things without believing they would happen,” Dlamini said.

He said due diligence was being completed and expressed hope that the hotel would reopen by the end of December.

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