Kerzner to Retire as Chairman of Kerzner International

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Sol Kerzner, hotel and casino magnate of South Africa, will retire as chairman of Kerzner International Holdings Ltd., following the acquisition by Corporation of Dubai of what is being called a “significant” stake in the company.

KIHL operates the One&Only and Atlantis brands and has properties in Dubai, South Africa, The Bahamas, Mauritius, The Maldives, Mexico and will soon open in Australia.

Kerzner founded the company in 1994. ICD announced last week that it has acquired “a significant equity investment” in the company from the Kerzner family and other investors. The purchase price was not disclosed.

Mohammed Al Shaibani, executive director and CEO of ICD, will take over as chairman of KIHL.

Debt restructuring arrangements led to Kerzer International giving up its Atlantis properties in Bahamas and Dubai, leaving the company as primarily a branding, management and development company.

Kerzner is a major figure in the development of tourism in South Africa, and a significant contributor to the development of the South African economy. He was the founder of both of South Africa’s largest hotel groups, Sun International and Southern Sun.  

The Rise

Solomon Kerzner was the youngest of four children of Russian Jewish immigrants who settled in a lower class suburb of Johannesburg and started a hotel chain. He was born Aug. 23, 1935. He graduated from the University of Witwatersrand as an accountant, joined a major accounting firm and was a partner by age 25.

His first foray in the travel industry was the purchase of the Astra Hotel in Durban. He expanded with another Durban hotel, then struck out on an uncharted path.

Kerzner singled out an undeveloped area with little apparent tourist appeal in the Umhlanga area of the province now known as KwaZulu-Natal and tried out an innovative approach to the hotel and resort business. His idea was to create a resort that would be self-contained, with entertainment, sporting facilities and a choice of restaurants and bars. The idea was revolutionary at the time and the Beverly Hills, South Africa’s first five star hotel, opened in December 1964. It quickly became a major success and tourist draw.  

Already a major success, Kerzner’s discovery that he had the golden touch was only the beginning of a long trail of innovative developments that stretched to North America.

He built the high-rise Elangani overlooking Durban’s beach, then joined with South African Breweries to establish the Southern Sun Hotel chain. By 1983, Southern Sun was operating 30 hotels. In 1975, Kerzner opened his first international property, Le Saint Géran in Mauritius.

PHOTO: A sculpture at Sun City, one of Kerzner’s most audacious creations, which he sold in the late 1980s. (Photo by David Cogswell)

In 1979 he opened Sun City. The property was in Bophutswana, which was recognized as an independent state by the apartheid government of South Africa and therefore not subject to anti-gaming laws or regulations against topless entertainment that applied to the country overall.

Sun City was relatively accessible to Johannesburg and Pretoria and became a popular entertainment destination. When the United Nations imposed a cultural boycott on South Africa in protest of apartheid, Sun City became a center of controversy when many big name entertainers performed there in defiance of the UN boycott, including Frank Sinatra, Paul Anka, Rod Stewart, Elton John, and Queen.

In 1985, Steven Van Zandt, the guitarist of Bruce Springsteen’s E Street Band, spearheaded an activist group called Artists Against Apartheid, and produced a record called “Sun City” in which 49 big name recording artists performed a song that proclaimed “I ain’t gonna play Sun City.”

Recording artists who participated in “Sun City” included Miles Davis, Bob Dylan, Herbie Hancock, Ringo Starr, U2, Keith Richards, Bonnie Raitt, Pete Townsend, Lou Reed and Joey Ramone.  

In the late 1980s, Kerzner sold Sun City. With the fall of apartheid in the 1990s, Sun City fell out of the no-man’s-land of political controversy and has continued to flourish in the post-apartheid era. The newly elected President Nelson Mandela asked Kerzner to take charge of the VIP function of the presidential inauguration for 1,000 attendees.

The Sun City property has four hotels and two 18-hole golf courses. It has hosted high profile events such as The Miss South Africa and Miss South Africa Teen pageants and the Miss World five times.

In 1994, Kerzner made his first major purchase outside of Africa, the Paradise Island Resort in the Bahamas, which was in bankruptcy. Kerzner doubled the size of the resort, incorporated a man-made marine habitat and a large casino.

In 1996 Kerzner opened Mohegan Sun on a 24-acre estate in Connecticut. It was the product of an innovative arrangement with the Mohegan Indian Nation, the Native American owners of the sovereign land.

In 2002 Kerzner launched One&Only Resorts, which now operates resorts in the Bahamas, Dubai, Mexico, Mauritius, the Maldives and South Africa. In 2008, he opened Atlantis, The Palm in Dubai.

Struggles

In 2006, Kersner’s son Butch, who had been CEO of Kerzner international for two and a half years and led the company through considerable expansion, was killed in a helicopter crash in the Dominican Republic.

One of Butch’s initiatives, the $1.5 billion dollar construction of an Atlantis Resort in Dubai, threw the company deeply into debt. But the payments didn’t come due till 2011.

In the following years, Sol Kerzner, now in his 70s, started to lose control over his empire and the business fell into hard times. A contentious divorce from his fourth wife in 2011 was said to have taken a toll on him.

In 2012, Kerzner International found itself over-leveraged and had to divest itself of properties to manage its debt load.

After stepping down as chairman of Kerzner International, Kerzner made a statement: “This is a significant milestone in my life after a long and happy career in the tourism industry and I wish the company well. I am confident that with ICD’s guidance, the company will fulfil on its upcoming expansions towards further growth and global reach.”