International Hotel operators show interest in African business

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Hospitality development in Sub-Saharan Africa has become a pivotal strategy for International hoteliers including Marriott International‚ Kempinski‚ Carlson Rezidor, Accor and InterContinental Hotels Group. Hospitality development in Sub-Saharan Africa has become a pivotal strategy for International hoteliers including Marriott International‚ Kempinski‚ Carlson Rezidor, Accor and InterContinental Hotels Group.

Sub-Saharan Africa is seeing a surge in hotel investment and development by overseas hotel operators, sighting economic growth which has boosted interest on the continent.

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Economic growth in Sub-Saharan Africa (SSA) continues to rise from 4.7 percent in 2013 to a forecasted 5.2 percent in 2014.

This performance is boosted by rising investment in natural resources and infrastructure, and strong household spending, according to the World Bank’s new Africa’s Pulse, a twice-yearly analysis of the issues shaping Africa’s economic prospects.

International hotel groups are looking to increase their investments in Africa, as the race for the continent’s promising long-term growth prospects intensify.

Hospitality development has become a pivotal strategy for hoteliers including Marriott International‚ Kempinski‚ Carlson Rezidor and InterContinental Hotels Group. This is as an undersupply of quality hotels fuels the growth to cater to domestic and regional business travellers as the continent’s natural resources boom and rapid urbanisation attract investment.

MD of consultancy W Hospitality Group Trevor Ward says Africa has generally never been an easy place to do business and is likely to remain more challenging than Europe or even China. But the lack of quality hotel rooms‚ not just in the capitals‚ but also in the secondary cities was so marked that the major international chains now could not ignore the opportunity.

“The big story this year is a dramatic surge in interest from the hotel chains in sub-Saharan Africa‚” Mr Ward said.

The number of branded hotel rooms planned for sub-Saharan Africa has risen consistently from 13‚700 in 2011 to 23‚283 rooms this year. Further‚ the number of hotel deals signed has increased sharply‚ from 77 hotels in 2010 to 142 hotels this year‚ representing growth of 84% over the five-year period and a compound annual growth rate of 13%.

Research from W Hospitality Group shows a marked divergence in activity when it comes to hotel development in Africa. International and regional hotel chains are signing more deals in sub-Saharan Africa than in North Africa. The 49 countries of sub-Saharan Africa have a development pipeline more than 40% greater than the five countries in North Africa‚ in double the number of hotels. By contrast‚ North Africa‚ which has experienced negative growth this year‚ continues to be harmed by the unrest in many markets in the region‚ particularly Egypt‚ where projects have either been suspended or cancelled.

Marriott International’s R2bn buyout of Protea Hospitality this month made the New York-listed group the largest hotel company in Africa with 125 hotels and 14‚000 rooms in 10 countries. It aims to triple revenue and increase rooms to 75‚000 in the Middle East and Africa in six years‚ said Alex Kyriakidis‚ who heads the chain’s Middle East and Africa business.

Meanwhile‚ French company Accor has plans for 30 hotels with 5‚000 rooms in Africa by 2016. It is prioritising Morocco‚ Algeria‚ Angola‚ Nigeria‚ Ghana‚ Ethiopia‚ Kenya and SA‚ said Manoël Parrent‚ Accor’s marketing director for sub-Saharan Africa.

Though Africa presents a compelling investment case — with higher profitability due to steeper average room rates in an underserved market — hotel development and trading in Africa comes with difficulties such as recruitment and training staff‚ and poor infrastructure that often delays construction. Securing property in a good location can also be difficult and costly.

Read more on:

Hotels and Leisure  |  Rezidor Hotel Group  |  Trevor Ward  |  Kempinski  |  InterContinental Hotels Group  |  Carlson Rezidor  |  AccorHotels  |  Marriott International

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