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IOLProperty - South African Property For Sale
Monday Oct 29, 2012

Fears over Durban's proposal for uShaka Marine World

Durban's finest tourism asset, the uShaka Marine World, would ultimately be destroyed by the city's "ill-informed and naive decision" to "in-source" the management contract.

This is according to hotel and hospitality boss Russell Stevens, who is also part of the consortium which presently has the management contract for uShaka.

While Logie Naidoo, the city Speaker and the former head of the economic development unit, defended the decision, saying it was part of an asset turnaround strategy, Stevens toldThe Mercury that in a short time the park would mirror the unkempt beachfront and many other city-run facilities.

Speaking in his personal capacity, Stevens said: "Of course we would like to keep the contract. But that is not why I am sticking my neck out.

"I say put the management contract out to tender again. If we win, we win. If we don't, we don't. But don't be naive and believe you can do it yourselves. If this is insourced it will become the only theme park in the world owned and run by a local authority.

"I have been in this game long enough to predict that this model just won't work."

Stevens's Three Cities Group is one of the partners in the joint venture with High Footprint Management (HFM), which secured the management contract 10 years ago. The other partners are an American company, which had experience in theme park management and a black empowerment consortium.

The Mercury reported last week that the city would not renew HFM's contract, which ends in March next year. It wants it to be managed by the Durban Marine Theme Park (DTMP), the legal entity owned by the city, which oversees the park and to which HFM reports.

The city's economic development committee believes the R9 million-a-year management fee earned by HFM is unacceptable because, it claims, the theme park runs at a loss.

Stevens said it did not run at a loss. The reason why it was in the red was because of the heavy depreciation of assets and servicing an unrealistic debt structure.

He said the 10-year contract had been concluded after intensive negotiations. "With the expertise of our American partners, we were able to assist with finishing it and putting in place proper management and systems," he said.

"From day one it made an operational profit... the only reason it has lost money is because of the ridiculous way in which it was originally funded."

While Naidoo agreed uShaka was in a "very sound financial position", the city wanted to review uShaka and the Moses Mabhida stadium. "We want to make them selfsustaining. Our intention now is to look at how we can have a turnaround strategy to reduce their reliance on ratepayers," he said.

But, said Stevens, theme parks were very complicated businesses to run. "We employ all the key staff and, while most will transfer to the DTMP and stay on in the short term, I don't believe the talent in this industry will work for government entities.

"As for the rest of the staff, the city may have to employ them in line with their own wage structures and cost of salaries could shoot up by between R25m and R30m a year."

Fedhasa's Warren Ozard said the Durban hospitality industry was "in shock" over the move.

"Shawn Thompson, current chief executive of uShaka, has done a fantastic job. Everybody keeps saying the council is throwing money in, but that's for the maintenance. The operation pays for itself," said Ozard.

The Mercury

 
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