GLOBAL REPORT—Not so long ago, Bani Haddad, Wyndham Hotel Group’s regional VP, Middle East and Africa, hardly ever set foot in Africa.
That has all changed.
“We were just servicing a couple of existing brands in North and West Africa,” said Haddad, who talked to HNN minutes after passing through passport control in Kampala, Uganda, on yet another African trip. “But in the last two years, the whole team has been traveling a great deal here. You have to. Africa takes time. It is based on relationships and trust.”
A perusal of Wyndham’s pipelines compared with its portfolio outlines dramatically Wyndham’s shift across Africa’s continental divide.
Wyndham has five hotels in four African countries comprising two brands (four Ramada hotels and one Hawthorn Suites by Wyndham) and 819 keys. All operate as franchises, and none are in East Africa, which comprises 20 eastern territories on the African continent.
Its pipeline in the next three years, however, consists of six properties (four franchises and two management contracts), comprising 940 keys. Of those, five are in East Africa, with Ramada properties scheduled for Tanzania (two), Kenya and Ethiopia and the Wyndham Amboseli Golf Resort & Spa scheduled to open close to Amboseli National Park in Kenya.
Other upcoming examples include Ramada Resort Dar es Salaam and Ramada Addis, both under management agreements and both with 136 keys, which are due to open by the end of 2014 and in 2015, respectively, and the 89-key Ramada Nairobi due to open in 2016.
Ethiopia opportunity
It is Ethiopia, however, that most excites Haddad.
“Ethiopia is undergoing unbelievable change, has Africa’s second largest population and significant gross domestic product growth and is seeing expansion in Ethiopian Airlines, infrastructure and industries such as flowers, coffee, sugar and manufacturing,” he said.
Haddad also said he is not just looking at the capital Addis Ababa, which is the home of the United Nations’ African Union and other non-government organizations.
“Brands definitely can have strength in (Addis Ababa), but we are also interested in (other Ethiopian destinations such as) the Lake Tana city of Bahir Dar, Lalibela, Gondar and Aksum that serve both domestic and international guests and where Days Inn would be perfect fit, budget product with international standards. These markets are crying out for this,” Haddad added.
Haddad said Ethiopia was also where he experienced the great change in Africa’s resistance to brands generally, spurred in part, he said, by domestic investors’ concerns regarding return on investment tending to involve a legion of third-party consultants.
“Ethiopian investors were reticent, but the change has been noticeable. When we sat down with the country’s minister of tourism last week with investors, they were very excited about how Wyndham’s Addis Ababa property would add to the city, not least in that it would employ 250 people. This underlined to me how things have changed very quickly,” he said.
The business model and capital structure in Ethiopia, Haddad said, was a mix of management contracts and franchise agreements and domestic and international money. Equity generally shored up the first 20% of each project before money came in from large domestic financial institutions. Chinese funds were also present.
Elsewhere in East Africa
Wyndham also has its sights firmly on Kenya, Mozambique, Tanzania and Uganda, the last two of which recently have discovered oil.
“In these places, political stability and the huge improvement in the provision of hotel sector data over the last five or six years has given us additional confidence,” Haddad said, who added that hotel companies have to commit to the long term on the continent.
For example, Haddad said, Kenya, despite recent turmoil, is driven by its 21 million domestic tourists, compared with 1.4 million international ones. Its announced Amboseli resort is targeted at both these groups, as well as the meetings, incentives, conventions and expositions market.
“It is natural for us to grow our strength in Africa across midscale, but we see opportunities across all brands.”
If Haddad has one bugbear in East Africa, it is the speed, or lack of it, in construction time.
“That definitely is a place for improvement, with most projects now taking three to five years,” he said.
East Africa, according to Haddad, is not a (hotel sector) race but is definitely a continent where everyone is discovering new opportunities.
“Everyone feels they need to be there, but you do not want to be one brand on your own,” Haddad added, referring to Wyndham’s 13 brands all having a part to play in future expansion on the continent.
The race is on?
Wyndham is far from the only international hotel company eyeing up the potential riches of East Africa. Here are some others:
- Accor: In 2014, 11 new contracts in Africa, including Pullman hotels in Addis Ababa and Nairobi.
- InterContinental Hotels Group: Announced in September it will open its first Ethiopian property, the Crowne Plaza Addis Ababa, in a management agreement with Tsemex Hotels & Business PLC.
- Marriott International: Following its acquisition of Protea Hotel Group, it will open 30 properties in Africa by 2020, nine of which will open by the end of 2015. Among the East African properties will be Residence Inn by Marriott Kampala Kololo (Uganda) and Marriott Executive Apartments Addis Ababa.