Each year, hotel markets across Africa pass major milestones in their quest to maturation.
David Damiba, managing partner and co-CEO of Johannesburg-based Kasada Capital Management, has witnessed the evolution of hotel investment and financing across Africa in career that has spanned decades.
“I’ve seen effectively 20 years of evolution in investment across Africa in the hospitality sector. … You’re looking at owners who might be fragmented as there are not too many institutional owners, but they tend to be sophisticated investors,” Damiba said the latest episode of CoStar News Hotels’ podcast “The Upgrade: EMEA Hospitality News.”
“In terms of [hotel] operations, owners are knowledgeable about their lack of knowledge,” Damiba added.
With 54 nations across Africa, each country is at a different stage of growth and maturity as far as hotel investors are concerned, he said..
“Egypt, Morocco and South Africa are in a bucket by themselves. And you have countries like [Ivory Coast] that have a long history of adding international operators in as well. It varies,” Damiba said.
Damiba spends a great deal of time analyzing, following capital trends and securing debt in Africa, which is another realm that is becoming very sophisticated across the continent, he said.
Kasada set itself up as investor and lender in 2019 and now owns 20 hotels and approximately 3,500 rooms in seven African countries.
“When you have scale, you can have really interesting conversations, not only with local lenders — meaning the larger banks in those individual countries — but also regional lenders and pan-African lenders,” Damiba said. “We have these three layers already, and above that layer you also have the development-finance institutions ... who are interested in participating in funding that sector due to its impact on tourism.
“We have actually found that with scale you have quite a bit of access to funding, and then the question becomes — and this has been the big story in Africa — that often you would have financing but it was not fit for purpose, meaning that the financing itself would not be structured in a way that enabled a hotel to operate.”
Alignment between hotel owners and operators exists a great deal more now across Africa, and Damiba said the process of investment being more fit for purpose is poised to keep growing.
“With scale, you will see more, what I will call, almost non-amortizing bond issuance, or bullet loans … which will put less pressure on hotel operations,” he said.
Damiba, who has been investing for near to three decades — 20 of them in Africa — said his path in the industry grew from his love of travel mixed with the complexity he found in finding financing solutions for African hotels and hospitality.
“Earlier this year, I did the math … and I have spent about six years in hotels,” he said.
For more from Kasada Capital Management's David Damiba, listen to the podcast embedded above.