Gaming and leisure group Tsogo Sun is set to gain the income benefits of having a portion of its hotel assets in a real estate investment trust (Reit) structure when it gains control of Hospitality Property Fund.

Reits must pay out the greater part of their income to shareholders on a regular basis.

Having listed in 2006, Hospitality has struggled since the 2010 Soccer World Cup to reward its shareholders with consistent income payouts.

Hospitality shareholders last week voted in favour of doing away with the company’s dual share structure and of Tsogo obtaining a controlling stake in the company. Tsogo would receive just more than 50% of Hospitality’s shares in return for the 10 hotels it plans to inject into the group. These are valued at almost R1.8bn. More hotels could be injected in the future, boosting the brand status of Hospitality.

“Hospitality was a good vehicle for Tsogo to ‘Reit up’ some of its hotel portfolio. Tsogo can take out some of the hotel income that is pre-tax,” Chris Segar, portfolio manager at Ivy Asset Management, said yesterday.

He said Hospitality was on an improved footing. “With the weaker rand and relaxation of visa controls of late, combined with the new multibrand portfolio, that is scalable, Hospitality has scope to increase room numbers. One potential headwind to Hospitality is the potential reduction of state spending, especially as (Finance Minister) Pravin Gordhan has outlined the intention for some austerity measures.”

He said another factor that may hinder hotel occupancies was the Airbnb service gaining traction in SA. Airbnb is a website for people who list, find, and rent accommodation.

“Airbnb makes it easier for stayover product that could never get to market, so it makes the informal market more accessible, and this may be a threat to hotels to some extent,” Mr Segar said.

Hospitality CEO Vincent Joyner said the vast majority of both A and B shareholders had voted in favour of the single structure.

The second vote was for the Tsogo deal, which was also successful.

Hospitality was waiting for Competition Commission approval for both the share structure change and the Tsogo deal.