REPORT FROM AFRICA—From the Ivory Coast to Ghana, Gabon, Nigeria and Kenya, a surge of pending and planned hotel openings in Sub-Saharan Africa is riding the continent’s wave of economic growth and political stability.
The direct contribution of travel and tourism to gross domestic product was $33.5 billion during 2011, according to the World Travel & Tourism Council. It is projected to increase by 5% year on year, reaching $57.7 billion by 2022.
That forecast, coupled with current economic growth averaging 6%, which is twice the global average, represent a major green light for the hotel industry.
“Over the past decade, six of the world's 10 fastest-growing countries were African, and for much of that time its economy has grown faster than East Asia. So if you are looking to grow your business, you can no longer ignore Africa,” said Andrew McLachlan, VP of business development for Africa and the Indian Ocean Islands for The Rezidor Hotel Group, which is gearing up for a surge across Sub-Saharan states.
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| Andrew McLachlan, VP of business development for Africa and the Indian Ocean Islands for The Rezidor Hotel Group, said the company is gearing up for a development surge across Sub-Saharan states. |
“We plan aggressive growth with both Radisson Blu Hotels & Resorts and Park Inn by Radisson through individual projects and portfolio deals,” he said. “Our focus is only international hotel management agreements with a minimum of 150 hotel rooms or more per hotel.”
Rezidor is “actively working” on a number of projects in Botswana, Cameroon, the Democratic Republic of the Congo, Liberia, Seychelles, Tanzania, Uganda and Zimbabwe, among others, McLachlan added.
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| The Radisson Blu Addis Ababa is one of several Blu properties set to open this year. |
Following on the heels of 2012 Radisson Blu openings in Addis Ababa (Ethiopia), and Lusaka (Zambia), and a Park Inn by Radisson in Tete, Mozambique, another Radisson Blu is set to open its doors in Maputo, Mozambique before the end of the year.
Since 2007, Rezidor’s Africa portfolio has expanded from eight hotels in five countries to 49 hotels—open and under development—in 21 countries.
“Today we are the fastest growing hotel group in Sub-Saharan Africa and have the largest pipeline of hotels in Sub-Saharan Africa,” McLachlan said. The new projects are being underpinned by a €35 million ($45.7 million) joint venture financing with four Nordic Government Funds.
He cited under supply of hotels, lack of branded hotels in large cities, outdated hotel inventory and up-and-coming destinations as major incentives for its African expansion strategy, on top of stronger GDP, tourism growth and more air traffic.
A magnet for growth
Serge Hattier, Accor’s senior VP of development for Africa and the Indian Ocean, said the Sub-Saharan economic performance—present and predicted—is proving to be a magnet to those who had shown no previous interest in the continent, while inciting long-established Accor to intensify its presence.
“Radisson is definitely a major competitor, but regional companies such as Protea Hotels and Lonrho are also aggressive on the market. International chains, which have little presence so far in Africa, are forging ahead to establish their brands—for example, Hilton (Worldwide) with its DoubleTree brand. InterContinental Hotels Group, (Starwood Hotels & Resorts Worldwide’s) Sheraton and Marriott (International) are very active as well,” he said.
While the expansion is being led by business tourism growth, Hattier predicts the leisure hotel market is set for takeoff.
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| Serge Hattier Accor |
“Relative political stability is also a positive factor and brought new countries including Rwanda, Liberia, the Ivory Coast and Sierra Leone back into business—hence new opportunities,” he said. “The region has become attractive for business hotels, with a steady growth of intra-African countries business.”
“In the medium and long term, the disposable income of millions of African households will generate additional hotel demand, especially in the midscale and economy sectors.”
Accor is not wasting any time, either. The group is partnering with private owners and developers to significantly expand the presence of Ibis and Sofitel across much of Sub-Saharan Africa.
Following the openings in 2012 of Ibis in Bata (Equatorial Guinea) and Dakar (Senegal), Sofitel will open in Abidjan (Ivory Coast) in January 2013 and Ibis in Ikeja, Lagos (Nigeria) in the first quarter of 2013. Hattier says an additional 12 hotels comprising 2,125 rooms are on the drafting board in Ethiopia, Gabon, Ghana, Cameroon and Nigeria.
“Most, if not all, of our new projects are funded by private owners and developers with Accor acting as the management company,” Hattier said.
Accor is focusing on developments in Nigeria, Ghana and Kenya, he said, due to market potential as well as a weak presence in those blossoming hubs. Meantime, it is keeping its eye on countries such as Angola and the Democratic Republic of the Congo, where entry barriers are still slowing down potential development. “Some of our competitors are considering countries where we feel the market is too limited,” Hattier added.
Percolating pipelines
With 13 pipeline properties, Onomo Hotels ranks No. 4 behind Ibis, Radisson Blu and Marriott in terms of planned hotel openings, according to the Nigeria-based W Hospitality Group; it also reported Nigeria is leading hotel development in Sub-Saharan countries in 2012, with 43 properties and 6,808 rooms, followed by Ghana (11 hotels), Gabon (eight hotels) and the Ivory Coast (three hotels). Kempinski, Mantis, Marriott and Wyndham have all signed deals to enter the burgeoning Nigeria market.
In seventh place with nine hotels in the pipeline, South African hospitality group Protea, is unleashing a rapid $130-million expansion in Uganda, Nigeria and Zambia.
The new builds and management acquisitions concentrated in Uganda are hinged to economic growth and rise of corporate travel, Protea’s Group CEO Arthur Gillis said in a statement.
For Rezidor’s McLachlan, the major remaining obstacles and risks in the group’s growth strategy in 30 capital cities in Africa include legal framework, building delays, cultural differences, recruitment and training, supplies and suppliers, owner relations—and getting paid.