Billionaire Tomorrow
"Quietly confident"
A hunger for growth and a love for disruption, Marc Wachsberger is perfectly poised to exploit opportunities as he seeks domination of the South African short-term apartment rental market.
It is a beautiful day to interview the short-term stay apartment disrupter, Marc Wachsberger. Driving into Sandton, the high-rise skyline over Africa’s richest square mile looks as magnificent as ever.
On this summer’s day, I park under The Capital On the Park, the centre piece of the world of Wachsberger. The elevator transports me to another world.
The interior seems neo-futuristic , the atmosphere is easy and calming under the ambient lights and jazz music. Joyful staff attend to the needs of smiling customers. The outside world has disappeared and the only resemblance is in the form of plasma screen televisions playing global news.
This five-Star Hotel is one of 11 Hotels in the ever-growing portfolio of Wachsberger, set to grow by at least two this year as he purchases struggling hotels at a fraction of the price.
As he and his team have done by acquiring the iconic Fairmount Zimbali Resort for R240 million.
“Times are tough for everyone; this is the time to buy. We buy through the noise.”
Times have been tough for all hotel groups as the global pandemic slammed the handbrake on global tourism. The lack of ordinary business has meant attaining funding for expansion is not easy.
“It was difficult to convince lenders and investors to invest during this time. Finding properties are easy but people are scared to invest.”
Wachsberger’s method of attracting investment is to run his hotels like he does his life. Confident, competitive, and respectful.
At the mere age of 40 he looks fit and hungry to continue expanding Capital Hotels and Apartments, the business he founded in 2008.
His motto is “quietly confident.” Both in life and business he is careful to overextend himself and ensures he respects all. From the bus boy to the floor manager, Wachsberger greets everyone.
“Respect is a two-way street; they greet you when you greet them first.”
His method seems to work as the excellence oozing team is one of the reasons Capital Hotel and Apartments is the fast-growing hybrid hotel group.
Known as an industry disruptor Capital Hotels is no mom-and-pop Bed and Breakfast.
As a hybrid group, they are in direct competition with Airbnb for short term apartment rentals. Their revenue streams are three-fold, traditional hotel stays, short term apartment visitors (ranges from 3 weeks to 3 months) and conference venues.
Benefiting from the South African brain drain, when external skills are now needed, these professionals can trust Wachsberger.
“We complete with the likes of Airbnb by our brand. Consistent and luxurious across our hotels. Unlike Airbnb where quality is inconsistent and maybe poor.”
Quality is proven by the type of visitors from President Cyril Ramaphosa to Hollywood stars.
However, Wachsberger also competes against traditional hotels groups, including the multinational, Marriot Hotels.
“We compete by being quick and nimble. We are owner-managed, hence the same person who runs the hotel owns the hotel. This allows for quick decisions. Unlike other hotels where the owner of the property and manager are separate.”
Changing the status quo and competing against multi-nationals is not where Wachsberger began.
Growing up in the suburbs of Johannesburg the goal was to become an entrepreneur.
“My father and brother are entrepreneurs. The plan was to become non-executive advisors to each family member. This way we don’t step on toes.”
Before taking entrepreneurship leap Wachsberger competed his Bachelor of Commerce at the University of Witwatersrand and became a Charted Financial Analyst. His goal was to gain professional experience to prepare himself for his entrepreneurship journey.
While working he spotted a gap, hotels are expensive and when one is looing for an apartment for a short term stay either the quality is poor, or the price is astronomically high.
Wachsberger had found his billion-rand idea, though as anyone who has searched for a home would say, property is not cheap.
Wachsberger was in a tough situation, he needed a large influx of initial capital, mixed with regular cash flows to start.
As most successful entrepreneurs do, he found and opportunity and took advantage of it. As South Africa geared up for the 2010 world cup, property development was on a high.
Wachsberger located at a building in which most apartments were to be rented out. He offered two services, to manage the property, and to furnish each room to the same spec.
Without buying any furniture before the contract was complete, Wachsberger was able to secure a profit on the sale of furniture. These valuable first pennies are how he managed to start his business. With little risk, he made a profit.
“Convincing the owners to furnish each apartment was not easy, this is where we needed to portray confidence.”
Starting a business is never easy, even if there is a hotel and short term apartment boom running into the world cup.
Wachsberger says: “You need to fake it ‘till you make it!” This is how to maximize those first Rands and grow out of the start up phase into a growth phase.
The world cup came and left a tidal wave of profits as supporters stayed for four weeks into short term apartments. However, the aftermath left a wave of hotel room oversupply.
“Times are tough for everyone; this is the time to buy. We buy through the noise.”
- Marc Wachsberger
Using the profits generated, Wachsberger was able to purchase hotels at cheaper prices and begin the expansion of his business.
The business expanded to a peak before Covid of R1 billion in revenue and 1400 units across South Africa.
The 2020 financial year is unfortunately not a pretty sight. Occupancy dropped from 80% pre-covid to 40%. On top of this, as demand has decreased, so did rates, yet fixed costs have remained the same.
“This is a tough period, very little tourism.”
Wachsberger was forced to pivot. His properties became a quarantine hotel for repartition residences flying back to South Africa. Encouraging ‘staycations’ and continuously benefiting from international professionals required.
Capital Hotels survived COVID yet other hotels succumbed, resulting in numerous acquisition opportunities.
“COVID has been terrible for South Africa, the lives lost, and jobs destroyed. But from a business perspective the opportunities which come from disarray is absolutely huge.”
Wachsberger as mentioned has purchased a hotel in Zimabli and will lease the beautiful 15 on Organe Hotel, in Cape Town, with the option to buy in two years.
Capital Hotels seems to be perfect and impervious to bad situations, yet this is not the case.
Before COVID, the weakening South African economy naturally hurts any business trying to grow, forcing alternative solutions to continue growth as the country stagnates.
“No organic growth means the only way to grow is to beat your competition.”
Wachsberger viciously competitive, understanding that during tough times providing a relevant competitive advantage is the only way to grow.
“One really needs to look at the competitive market to see an angle on competition to be better than the rest.”
As Wachsberger looks to the future, his goal is to become the largest Hotel and Short-term apartment Group in South Africa.
Wachsberger never overstates his position, nor boasts, but rather remains quietly confident.
