SA hotel groups have upped their empowerment game in the past few years. Driven by stringent BEE conditions set by provincial gambling boards in the evaluation of casino licence applications and a new tourism sector charter, bigger gambling players have led the way in BEE. But apart from the three top-ranking firms - Sun International, Phumelela Gaming & Leisure and The Don Group - total empowerment scores among smaller players are low.
Sun International's R604m BEE deal with the Dinokana consortium in 2006 catapulted the group to first place in this year's ranking. Phumelela Gaming & Leisure, SA's largest horse racing firm, has improved its overall BEE score by beefing up its preferential procurement and enterprise development scores. BEE groups have a direct equity stake in Phumelela totalling 27,5%. Now it will have to ensure that if BEE groups sell their shareholding to realise profits, they sell to other BEE groups.
The Don Group slid to third place this year mainly because of its better financial performance - it had to contribute more across all measurements to win more points in the rankings. "Sometimes companies become victims of their own financial success," says Empowerdex project manager Steven Hawes. It still pips its peers, though, with its management score, with more black members on its senior management teams, as a percentage.
Hotel chain City Lodge says it has made considerable progress in introducing 15% direct black shareholding in the ordinary share capital of the company.
But the biggest BEE story in the sector last year was airline company Comair's spat with the labour department. The department took the company to court for allegedly breaching provisions of the Employment Equity Act. These alleged breaches include failing to prepare and implement an employment equity plan, which would achieve reasonable progress towards employment equity in Comair's workplace between 2000 and September 2007. Comair retaliated saying it would not "be bullied by an inefficient and ineffective government department". Both parties filed affidavits in the labour court and Comair filed an application to dispose of the matter.
Comair sold 16,1% of its shares to Thelo Aviation, a BEE consortium in 2006.
Family-owned Spur Corporation still has no BEE ownership to speak of and its transformation at management level is slow. However, the group has recently finalised an innovative deal with the Industrial Development Corporation to kick-start black franchisees of its restaurants across the country. "It's a solid business model, but it doesn't fall within BEE codes," says Hawes.
Tourvest reconstituted its board and introduced a new black shareholder with a 5% holding at the Tourvest Limited level. Imperial Holdings, the single largest holder of Tourvest's shares, also concluded empowerment equity ownership transactions in the past two years, resulting in a 12,6% indirect empowerment at Tourvest, excluding the Public Investment Corporation's 18% stake in Imperial.
