Q&A with Marc Wachsberger: Turning isolation into occupancy

Marc Wachsberger started The Capital Hotel Group in 2008 when SA was in the throes of the global recession.

Hotels business received a boost in the run-up to and during the 2010 Fifa World Cup, after which the leisure, entertainment and hotels industries went into a slump. But Capital Hotels’ offerings didn’t suffer a recession.

It became popular among corporate travellers, especially those wanting to rent a room for three months or more.

The country is going through testing economic times again, but this time it’s also being hit by the Covid-19 pandemic. The Capital group has lost clients as businesses cancel conferences.

To deal with the loss of occupancy, the company implemented isolation services more than a week ago, including rooms complete with food and other necessary products.

The company upped its offering after President Cyril Ramaphosa’s announcement of a national 21 day lockdown by making its rooms available at discounts of up to 70% for people that want self-isolation after contracting the coronavirus.

The hotels will remain fully staffed. The Capital Hotels group has five properties in Johannesburg, two in Pretoria, and one each in Cape Town and Durban.

Why implement this offering now?

We understand that plans are constantly changing in these challenging times, and that business executives and families may need somewhere to stay, other than their regular home. Our apartment hotels have already been well prepared for social distancing and self-isolation practices, and our national footprint means that people all over the country can take advantage of this offer.

How successful have the isolation services been so far? How popular are they?

We had an incredible response from our clients for helping to contain the spread and flatten the curve. However just as more and more bookings were coming in, the government announced the lockdown which has slowed further bookings.

If SA does not take the shutdown seriously and fully contain the virus, we will need to continue providing the self-isolation options at The Capital Melrose and The Capital Menlyn Maine. We hope not to have to get any of those bookings!  

When you started Capital Hotels and Apartments in 2008, you found a niche in the market. Do you think there are other niches in the hotels market now?

As lockdown was announced, we released our apartments for medium-term furnished rentals at 70% discounted rates. We have had a flood of business from this and we encourage anyone needing a safe, furnished apartment for the lockdown to move in immediately. This has proven to be the plan B of our business that we always envisaged. The ability to pivot an apartment hotel into a longer-term apartment rental. This is why this niche existed in the first place.

Does coronavirus prevent you from launching new hotels in 2020?

We are unlikely to open further hotels in 2020. We will however be full steam ahead to open two hotels in 2021. We think the long-term prospects are great.

When does a weak economy start to hurt Capital Hotels?

We have geared our business up for weak economies. We always modelled that we could be break-even at 50% occupancy or less, far lower than our hotel competitors. However, a systemic event like we are seeing is causing a collapse of occupancy and rate of the rooms, so we are hurting for sure.

If you could go back to 2008 when you started this business, would you do anything differently?

Hindsight is perfect sight. However, all decisions made were brilliant considering our available information at the time. One cannot have regrets.

Why did you start Capital Hotels? Did any key investors convince you to start the project or to keep it going when it hit early snags?

We never had early snags. It’s been relatively plain sailing up until now, in a SA context that includes plenty of challenges. We started the business to disrupt the norms of the hotel business and provide value to clients. We are now doing this for all of SA.