No slowing down

Some of Africa’s most prominent economies have endured a difficult year or two, but hotel development continues at an impressive pace, with some of the world’s biggest brands refusing to back off from the opportunity the continent presents.

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The short-sighted among us may look to the poor performance of some of Africa’s biggest economies in the past year or so and wonder how hotel development on the continent can continue at the pace it does, but there’s no doubt that some of the world’s big hotel players have taken a long-term view on Africa and are still convinced that it remains brimming with opportunity.

The stats don’t lie, and if you look at the number of hotels that opened in 2016 and the deals signed in the past year, it’s clear that hotel development on the continent remains as healthy as ever, even though activity has slowed slightly.

Sure, challenges remain, and things do tend to take a little longer in Africa, in terms of hotel projects reaching fruition, but that hasn’t deterred the big international players and even some of the home-grown brands.

“While it is true that some of Africa’s largest economies have seen a slowdown, we are cautiously optimistic that this will stabilize,” says Alex Kyriakidis, President & Managing Director Middle East & Africa, Marriott International. “The economic pressure is likely to see owners of unbranded hotels and unbranded high-end residential seek a ‘flight to safety’, and we can expect to see a surge in conversions from unbranded and poorly-performing brands.”

“We take a very long-term view on the market. The slowdown that is currently being experienced in certain markets will be short-term, and we don’t make decisions based on market sentiment,” says Sir Richard Hawkins, Regional Director Hotel Operation, Africa at Minor Hotels. “The hotel industry is here for the long-term.”

Backing up this notion is information gleaned from W Hospitality Group’s annual ‘Hotel Chain Development Pipelines in Africa’ report, which has become an authoritative source on the growth of the hotel industry in Africa.

Presented by Managing Director and Business Traveller Africa contributor Trevor Ward, this year’s report – the ninth edition – had 36 international and regional contributors, and reported pipeline activity of almost 73,000 rooms in 417 hotels, which was a 13% increase on the 2016 pipeline. That included 86 deals signed, which was down on 2015’s figure of 121. So, while activity continues, it hasn’t been all plain sailing.

“2016 was a challenging year for many countries in Africa, with low prices of oil and other commodities resulting in reduced government spending on infrastructure and other capital projects,” says Ward. “Foreign exchange fluctuations also made doing business more difficult and there was a loss of investor confidence, both domestically and internationally, in countries like Nigeria and Angola, which have single-commodity economies. However, despite this slowdown in some countries, others benefitted, particularly those who import (cheaper) oil, and there has been increased activity generally in Southern and East Africa.”

Significantly, the report identifies the fact that 47% of pipeline deals scheduled to open in 2016 actually opened, which was up from 36% in 2015. As already stated, this is an issue in Africa, in terms of, firstly, extensive construction time frames, and secondly, the perceived ‘smoke and mirrors’ that some cynics believe applies to African hotel development pipelines, with regards to what is reported by the various groups.

It is encouraging, though, to see an increase in the above percentage.

So, who is doing what, who are the big movers, and who is keeping their cards close to their chests?

BIG MOVERS

Last year’s big African hotel development story was AccorHotels’ 50-hotel deal in Angola, which shot them to the position of number one developer – in terms of the W Hospitality report – for the first time and positioned Angola as the country with the largest pipeline, displacing Nigeria, which had led the field for several years.

Accor remain out in front in this year’s report, but only just, in terms of the number of planned hotels, with Marriott now snapping at their heels, due to last year’s merger with Starwood. In fact, the two groups are very close in numbers, with Accor’s 84 planned hotels just pipping Marriott’s 83. However, when it comes to the planned number of hotel rooms, it’s clear that Marriott’s hotels are bigger, putting them out in front, with 16,393 rooms versus the 13,286 of Accor.

That pipeline includes three new properties in Cape Town, under the group’s Marriott Hotels, Residence Inn and AC Hotels brands.

“Marriott International currently operates over 140 hotels with 23,500 rooms across 20 countries in Africa,” says Kyriakidis. “The projected target is over 200 hotels with more than 36,000 rooms across operating and pipeline hotels by 2022.”

It’s interesting to see which countries sit in the Marriott pipeline.

“Marriott International will enter new countries like Benin, Botswana, Ivory Coast, Madagascar, Mali, Mauritania, Senegal and South Sudan,” says Kyriakidis. “It is also gearing up to foray new brands, including AC Hotels by Marriott, Aloft, Autograph Collection, Element, Residence Inn by Marriott and W Hotels into Africa.”

This, off the back of a 2016 that saw Marriott add nine hotels – with a total of 1,816 rooms – to the African market. That included the opening of the Kigali Marriott Hotel, located in the central business district of the Rwandan capital.

“Unprecedented economic growth, rising middle class and rapid urbanization is fuelling the demand for travel and the need for good quality lodging,” says Kyriakidis. “Africa is still an ‘under-hoteled’ market with under capacity in most cities.”

The development team at Hilton clearly feels the same way, with 41 hotels and 9,098 rooms in its pipeline, according to W Hospitality’s report. Interestingly, Hilton have the second-largest average hotel size – in terms of number of rooms (222) – of all the groups in the report’s top 10, behind only 10th-placed Meliá Hotels International of Spain.

According to Mike Collini, Vice-President of Development for sub-Saharan Africa, Hilton expects to double in size across Africa in the next five years or so to more than 80 hotels.

“We are delighted that this growth is broadly spread across Africa, with additional properties signed in some key markets such as Kenya, Nigeria, Ghana, Ethiopia and Morocco,” says Collini. “But significantly, we are signing hotels in countries that we are not currently operating in, including Burundi, Zambia, Uganda and Swaziland, and we are spreading our footprint, brands and service throughout Africa.”

On the subject of brands, the big Hilton story in 2017 is the roll-out in Africa of its Hilton Garden Inn brand, with 16 projects currently signed and in development.

“Hilton Garden Inn is an incredibly dynamic brand that is highly efficient to both develop and operate, and is highly profitable, so developers and investors are drawn to the brand as an ideal solution in markets throughout Africa, which is why we are seeing such high demand for the brand,” says Collini. “It also meets a huge range of market segments in both business and leisure, and consumers love the product offering and service values that the hotels offer.”

Another interesting Hilton take-out is the group’s plan to bring brands that don’t currently enjoy a presence in Africa to the continent, with Curio and Canopy by Hilton apparently head of that queue. There’s also the interesting focus on specific locations on the African continent.

“Hilton is developing widely across sub-Saharan Africa with a focus on key cities and airports, so recent signings include Hilton Lagos Airport and Hilton Garden Inn Accra Liberation Road,” says Collini. “We see a great opportunity across the continent due to the under-supply of quality accommodation currently available in much of Africa.”

The Rezidor Hotel Group is the other big mover in the top five of W Hospitality’s report, with 39 hotels and 7,862 rooms in its pipeline. What’s interesting about this group is that whilst some groups remain coy about specifics and where their focus lies, in terms of development opportunity, Rezidor is happy to detail exactly what its targets are and where its focus lies.

To that end, it identifies markets that it likes to call “proactive markets”, which are countries where the group currently has a presence – excluding Tanzania – but would like to see a greater presence. So, the two numbers below are Rezidor’s existing hotel footprint in each country, followed by a target it would like to achieve by 2020:

  • South Africa – currently 14; target 20
  • Ethiopia – currently 3; target 5
  • Kenya – currently 3; target 5
  • Tanzania – currently 0; target 3
  • Mozambique – currently 3; target 5
  • Ghana – currently 1; target 5
  • Nigeria – currently 7; target 15
  • Algeria – currently 2; target 10

“The following markets offer us scale to develop multiple hotels within a single city or to/in addition to developing a domestic business circuit within a single country,” says Andrew McLachlan, Senior Vice-President, Business Development, Africa & Indian Ocean, The Rezidor Hotel Group. “The size of the market, economy, population, political stability, general infrastructure, airports and airlift, how developed local tourism is, who else is in the market (competitor), are all considered before we enter a proactive market with a focus to develop our hotels into the depth of the country with scale.”

Rezidor is proud of the fact that it has opened 10 hotels in Africa in the last 18 months, including Radisson Blu properties in Nairobi, Abidjan, Lomé, Marrakech, and Kigali, a Radisson Blu Hotel & Apartments in Cape Town, a Radisson Blu Apartments in Maputo, and Park Inn by Radisson properties in Nairobi, Kigali, and Polokwane in South Africa.

According to McLachlan, the next 18 months will see Rezidor accelerate its openings to one hotel every 45 days in locations such as Cape Town (Radisson Red), Kampala (Quorvus Collection), N’Djamena (Radisson Blu), Sousse (Radisson Blu Resort), Nairobi (Radisson Blu Hotel & Apartments), Algiers (Radisson Blu), Luanda (Park Inn), Benguela (Park Inn), Namibe (Park Inn), Lubango (Park Inn), and Cabinda (Park Inn).

And looking further ahead?

“Our focus will be to add more lifestyle select Radisson Red hotels in select cities across Africa, enter a new market (more than likely Cameroon), focus on taking over existing hotels and converting them to one of our brands, adding more beach resorts to our growing portfolio in the Indian Ocean Islands, and roll out hotel service apartment and hotel & apartment concepts across Radisson Blu and Park Inn by Radisson in key cities in Africa,” says McLachlan.

Rounding out the top five in W Hospitality’s report is Best Western, with 18 hotels and 1,652 rooms in its pipeline, which saw the group climb from ninth position in 2016.

“Best Western Hotels & Resorts has agreements in place for hotels in Cape Town (Vīb); Addis Ababa (Best Western and Best Western Plus); Lagos, Ibadan and Abuja (Best Western and Best Western Plus), and four properties in Nairobi (Best Western Plus and Executive Residency by Best Western),” says Karl de Lacy, International Development Director for Best Western Hotels & Resorts.

“One of the Nairobi hotels will be the first BW Premier Collection hotel in Africa. This is our soft brand offering for upper upscale and luxury hotels who understand the value of the global distribution and power of a global loyalty club, but don’t need the full brand requirements which would apply for a Best Western Premier hotel.”

Interesting to see Best Western introduce two of its other brands to Africa for the first time, in the form of the Vīb property in Cape Town and the BW Premier Collection in Nairobi.

“By adding two of our newest offerings in Africa, Best Western Hotels & Resorts is delighted to have the opportunity to showcase these brand offerings which will help grow these development options and the brand awareness and growth across Africa,” says De Lacy.

Whilst acknowledging the current tough operating conditions, De Lacy believes this actually works in Best Western’s favour.

“While there is a slowdown, our model allows for developers to be part of a global brand, without the stringent guidelines required by some of the other brand owners,” he says. “This flexibility allows us also to consider smaller scale projects, which reduces the risk of the investor.”

That’s some pipeline, in terms of the top five hotel chains in W Hospitality’s Report, with Accor, Marriott, Hilton, Rezidor and Best Western accounting for 265 planned hotels to be added to the African market in the coming years.

OTHER INTERNATIONAL PLAYERS

The rest of the international players with a presence on the African continent may not have the pipelines of the above groups, but there is still activity and movement.

IHG, for example, comes in at eighth on W Hospitality’s list of ‘Top 10 Chains by Number of Planned Rooms’, with 1,632 rooms in their pipeline.

In the short-term, that includes two openings in 2017. Firstly, the Holiday Inn Mutare in Zimbabwe – a conversion project in partnership with African Sun, which is expected to open in July. That is expected to be followed by the Holiday Inn Algiers Cheraga Tower, a new build hotel and the first Holiday Inn in Algeria. With over 240 rooms, this hotel is expected to open in November.

Also on that list are Hyatt, one spot below IHG with 1,564 rooms. In the short-term, the group has three hotels scheduled to open in 2018 – two under the Hyatt Regency brand (150-room Hyatt Regency Arusha and 180-room Hyatt Regency Addis Ababa), and the 150-room Hyatt Centric Dakar, which will be the first Hyatt Centric in Africa. For 2019, the 326-room Hyatt Regency in Algiers is scheduled to open.

Thailand-based Minor Hotels became a more significant player in Africa in 2014 when it completed the purchase of the majority of the African assets previously owned by South African hotel and gaming operator Sun International. That suddenly gave Minor a presence in Zambia, Botswana, Lesotho and Namibia, to go with their existing presence in Mozambique, Kenya, Tanzania and Seychelles.

“The rebrand has had its challenges, but in the main it has not been too difficult,” says Hawkins of the process that involved introducing Minor’s Anantara and AVANI brands to the properties previously branded by Sun International. “The traditional names of the hotels operated and owned by Sun have proven difficult to change, and in some cases the hotels remain referred to by their old names, but the market has welcomed a new entrant to the industry, and with a change in ideas of operator it has been well received.”

“The major learning from the conversion is getting the new owner operating and management ethic embedded in the manner in which senior and middle management conduct themselves. It is critical for the team members to understand why the change will benefit them, and what it means to their working life.”

After a period of consolidation, Minor Hotels is now looking closely at expanding its African footprint.

“The cities in South Africa that we are targeting are Johannesburg (Sandton), Cape Town, and Pretoria,” says Hawkins. “We will look at Durban, but more along the north coast. We are currently looking in Kenya (Nairobi), Uganda (Kampala) and Ethiopia (Addis Ababa), where we may have some announcements soon.”

And why these particular locations?

“These locations in our view represent the biggest growth opportunities in these countries,” says Hawkins. “We are currently considering both investment in the hotels and management agreements.”

Another group making a play in Africa is Swiss International Hotels & Resorts. The group already has properties in Ethiopia, Ghana, Nigeria, Sierra Leone, Rwanda, Kenya and Guinea Bissau, with plans for more hotels in the future.

“We are expecting nine newly-developed hotels by the end of 2020,” says President & CEO, Henri Kennedie. “One of which is the Swiss International Resort Mount Kenya, a mixed-use of residential and holiday development located at the scenic foothills of Mt. Kenya with villas, townhouses, a 180-room hotel, conference and events venues. The resort is currently under construction and is expected to open its doors by December 2018.”

According to Kennedie, other developments are set to take place in Uganda, Ethiopia, Kenya, Zambia and Nigeria.

“Africa remains one of our strongest growth markets in the region. Swiss International is fully committed to hotel expansion in Africa and we see a strong trajectory over the coming years” says Kennedie.

SA GROUPS

Before we look at the activity of South Africa’s hotel groups, it’s interesting to note the country itself as a hotel development location.

Thanks to a relative flurry of activity, South Africa climbed into fifth place in W Hospitality’s ‘Top 10 Countries by Number of Rooms’.

According to the report, “approximately 50% of the deals in South Africa were signed between 2015 and 2017, after something of a drought following the surge in supply for the 2010 FIFA World Cup. The number of pipeline rooms in South Africa more than doubled (a 117% increase), from 2,058 rooms in 11 hotels in 2016 to 4,484 rooms in 33 hotels in the 2017 pipeline.”

Obviously, that doesn’t necessarily mean that the country’s groups have been active within their own country – particularly if you take into account the greater interest shown in South African development by the likes of Rezidor, Hilton and Minor Hotels – but it’s interesting to see the country come out of that cycle.

As far as the groups themselves go, the most active of the South African players appears to be City Lodge, but beyond the country’s borders. The group is making steady progress in the development of four new hotels in East and Southern Africa, due to open between the third quarter of 2017 and the fourth quarter of 2018.

“Town Lodge Windhoek is likely to be the first of the new hotels to open late in the third quarter of 2017, followed by City Lodge Hotel Two Rivers, Nairobi, early in the fourth quarter,” says spokesman Angus Macmillan. “City Lodge Hotel Dar es Salaam is expected to open in the first quarter of 2018, with City Lodge Hotel Maputo the last to open towards the end of 2018.”

By the time all of these new hotels have opened, City Lodge will have seven hotels outside of South Africa, taking its overall total to 61 hotels in six countries. It currently has 54 hotels in South Africa, two in Kenya and one in Botswana. The group’s brands include Fairview Hotel (Kenya), Courtyard Hotel, City Lodge Hotel, Town Lodge and Road Lodge.

“The group is continuing to evaluate other African and Indian Ocean growth possibilities in Kenya, Uganda and Mauritius,” says Macmillan.

Also making waves beyond South Africa’s borders are BON Hotels, who already enjoy a portfolio of properties in South Africa, Nigeria, Namibia, and Uganda. In October the group launched BON Hotels International West Africa with six hotels in Nigeria. It also announced pipeline projects in Apo, Ekiti and Owerri – all in Nigeria.

“Since this previous announcement we have added three more properties to our Nigerian stable, which permits us the privilege of being the largest hotel group in the country,” says Bernard Cassar, Director, BON Hotels International West Africa.

The new additions include BON Hotel Grand Pela in Abuja, which opened in February this year, BON Hotel Lekki, a four-star 45-room hotel currently under construction and due to open in Lagos in 18 months, and Bon Hotel Elvis Wuse, which is a new build, currently under construction and due to open in December.

“We will also be doubling our capacity at BON Hotel Abuja with the acquisition of the property next door,” says Cassar. “Construction will commence in the next three months and on completion will offer a 60-bed five-star boutique hotel.”

And BON aren’t stopping there or confining their development to Nigeria or West Africa.

“Together with new acquisitions in East Africa – in Uganda and Ethiopia – and continued growth prospects throughout the continent to add to our South African and Namibian portfolio, we will continue to explore opportunities on the continent,” says Cassar.

He also has some interesting thoughts on what types of hotels potentially offer the best return on the African continent.

“In our experience, very few hotel developers on the continent want anything other than a five-star property, which is nine times out of ten a ‘return on ego’ rather than a return on investment,” he says. “Three and four-star market opportunities in Africa are barely developed, but are yet without doubt the most lucrative of all. Africa is crying for a budget-type affordable hotel chain, set within international three and four-star standards.”

Closer to home in South Africa, Tsogo Sun’s big local story in 2017 is the opening of the group’s new dual-brand 19-storey hotel development in Cape Town. The development – which consists of the SunSquare Cape Town City Bowl and the StayEasy Cape Town City Bowl – will add 504 rooms to this city’s market.

Beyond South Africa’s borders, Tsogo Sun is building a new StayEasy in Maputo. The hotel offers 125 bedrooms and will be completed by 1 May 2018. Also in Mozambique, but already open, the Tete Ferry Sun in the north of the country opened on 1 May. The group also plans to open a Southern Sun in Accra, Ghana. Located in the Diplomatic Quarter, the hotel will offer 150 bedrooms and is due to open in the third quarter of 2018. Tsogo Sun’s remaining development project is a Garden Court in Kitwe, Zambia. This new 130-room property is under construction and expected to open in the third quarter of 2018.

Another South African player, aha Hotels & Lodges, participated in W Hospitality’s survey for the first time, with the report stating that “aha has a healthy pipeline in South Africa andcurrent operations there as well as in Botswana, Zambia and Zimbabwe.”

According to Business Development Director, Andrew Rogers, aha was due to have the Swakopmund Collection of three properties in Namibia officially joining the portfolio on 1 July. In addition, the Epacha Game Lodge & Spa and the Eagle Tented Lodge, both near Etosha National Park’s Andersson Gate, were also due to come on stream on the same date.

“Namibia is one of the fastest growing world tourist destinations with easy connectivity to most of the European and Middle East destinations, allowing for an overnight flight from most of the global airport hubs,” says Rogers. “The variety of tourism offerings, along with the ideal climate and weaker currency, has seen the demand for beds outstrip the supply fairly quickly, and this scenario is likely to last for some time as the development pipeline is relatively small.”

aha Hotels & Lodges is also opening the Gondar Lodge in Ethiopia in the last quarter of 2017.

“This spectacular new build property is ideally located in the tourist mecca of Gondar and close to the Simien Mountains, which is a ‘must-see’ when visiting Ethiopia,” says Rogers.

aha Hotels & Lodges currently enjoys a portfolio of 38 properties across South Africa, Botswana, Namibia, Zimbabwe and Zambia, and Rogers believes the group’s model makes it attractive to potential partners.

“The aha Hotels & Lodges business model and highly flexible approach makes it an ideal choice for an owner/developer to consider the full management of their asset,” he says. “We are one of the only hotel/lodge management companies that specialize in managing hotels, resorts and lodges.”

One of the less-active South African groups is Peermont, although the focus of this group – as with Sun International – arguably remains on gaming. That being said, Peermont has been ‘beefing up’ its existing properties, with a host of improvement work. That included a R145m ($11.2m) investment in two new hotel annexure projects for the group’s Metcourt brand – a 20-key room extension to the Peermont Metcourt at Khoroni in Thohoyandou, as well as a 100-key sports and family room wing at the Peermont Metcourt at Emperors Palace in Johannesburg.

“With the reality of low GDP growth in most SADC countries, most local and international hotel companies are taking a conservative view on investment opportunities currently,” says Mark Jakins, Group Marketing and Regional Operations Executive. “Even those companies who try and take on lease agreements (which puts strain on their balance sheets) or management contract opportunities (for those companies who don’t have access to large capital amounts) are in a state of flux. By all accounts, South African operators are finding the going tough in a few jurisdictions in Africa.”

Peermont currently doesn’t have plans to extend its existing footprint beyond South Africa, Botswana and Malawi.

“Our most recent projects outside of South Africa include the Peermont Metcourt refurbishment programme in Francistown, Botswana, and the successful management contract at Umodzi Park in Lilongwe, Malawi, where Peermont took over the management of the five-star President Walmont hotel and Bingu Wa Mutharika International Convention Centre,” says Jakins.

CONCLUSION

Sure, there were fewer deals signed in 2016 than 2015, but the fact remains that hotel development shows little sign of slowing down on the African continent. According to W Hospitality, there was a 13% increase in activity in its 2017 ‘Hotel Chain Development Pipelines in Africa’ report, and if the comments of the international hotel executives in this piece are anything to go by, it’s clear that most of the big groups are taking a long-term view on Africa and haven’t been deterred by the slowdown in some of the continent’s biggest economies.

Opportunity remains.

“If those involved – the investors, the chains, the consultants and the lenders – can get these and

more deals to fruition, the pipeline of the future will result in much-needed expansion of Africa’s hotel industry, on a continent that is still woefully under-provided,” says W Hospitality’s Trevor Ward.

He also remains positive about the road ahead.

“Several countries in Africa have had severe economic problems in the past couple of years, and inevitably further problems will be experienced in the years to come. But there are signs that we are turning the corner in 2017, and whilst growth is more muted, there is an acceptance of the ‘new normal’, with lower-valued currencies and less government income, but a desire to move forward again.”

“The world in 2017 is a very different place to when we started this survey in 2009, but Africa is still rising, at least as far as the development activities of the hotel chains is concerned.”

Not quite a ‘hotel group’

As opposed to a ‘standard’ hotel group, Preferred Hotels & Resorts is what the hospitality industry likes to call a ‘soft brand collection’ and a global portfolio of independent hotels. Member hotels get access to Preferred’s expertise and support services, such as distribution, reservation management, loyalty, and sales and marketing, while still maintaining their individuality.

“Our advantage over hotel chains and other hard brand hotel group management contracts is our flexible, collaborative approach and specialism in the independent hotel space,” says Mark Wernich, Director of Business Development for Africa. “The crucial points of difference are that we truly understand and champion the spirit of the independent hotel, that our relationships with hotels are mutually beneficial partnerships, and that all of our member hotels are truly independently operated, owned, and managed. Our expertise and innovation in this field gives us an edge, and our global portfolio of more than 650 independent luxury properties in more than 85 countries demonstrates this.”

But what about some of the ‘nitty-gritty’, if Preferred Hotels & Resorts is not an actual hotel group?

“As a revenue-creating, marketing and sales-focused hospitality brand, Preferred Hotels & Resorts offers hotel owners and operators the same tools and support as the large hotel chains, but with the added benefits of more flexibility, cost savings through a lighter fee structure, and a global sales network,” says Wernich. “For example, our membership contracts are typically three to five years in length – approximately 80% shorter than the chain hotel groups – which ensures that we are performance-driven and show rapid results. We also offer a more cost-effective model for independent hotels, partly due to the fact that our member hotels are not required to support our infrastructure, as is the case with the newer brands from chain hotel groups. Plus, the vast scale of our organisation brings many benefits to hotels that would not otherwise have access to them, such as the ability to form global partnerships and access key corporate travel accounts.”

Preferred Hotels & Resorts currently have 26 member properties in their sub-Saharan African portfolio and are working on approximately 20 pipeline hotels in Kenya, Nigeria, Zanzibar, Mauritius and South Africa, where the focus is on opportunities in Johannesburg and Cape Town.

“While it is true that that many markets in Africa are slowing down in terms of economic development, with some even facing a recession, we are still experiencing growth overall and the steady development of new business and leisure-focused hotels across the continent,” says Wernich. “Now, more than ever, African hotel owners and operators realise the benefits of global marketing and sales-led partnerships to enhance their revenue streams and to broaden their reach. African tourism on the whole will see vast improvements over the coming years, as governments continue to recognise the potential of the hotel and hospitality sector to drive their economies and, as a result, are seeking to engage with global hospitality partners on a national level.”

What’s the ideal hotel model?

While management contracts still seem to be the preferred model, diversification of the product to the select service segment has given rise to developers seeking to franchise, a trend we noted in 2016 and foresee will continue and drive further growth opportunities for us.” – Alex Kyriakidis, President & Managing Director, Middle East & Africa, Marriott

“We currently operate a mix of management and franchise contracts across Africa and while the majority of our hotels are managed, we do see increased opportunity for franchise in certain markets.” – Mike Collini, Vice-President Development, sub-Saharan Africa, Hilton

“Different motivations and different returns are expected by a management company versus an owner. Outside of South Africa, an owner expects a total repayment within 3-4 years. However, development costs in a country like Nigeria are four to five times more than costs in South Africa, for example. Over and above this construction, building and development can also take up to five times longer. The most profitable scenario from an owner’s perspective will be a city centre hotel in high revenue areas such as Luanda, Lagos and the Cape Town Waterfront, for example.  The most sought-after management contract, on the other hand, would be one that is over a 10 to 20-year period. Larger, higher rated city centre hotels are clearly more valuable than smaller country properties.” – Bernard Cassar, Director, BON Hotels International West Africa

“Considering the diverse class of owners, an international management agreement offers the hotel owner the highest return on his investment, especially if the owner has limited hotel experience.” – Andrew McLachlan, Senior Vice-President, Business Development, Africa & Indian Ocean, Rezidor

“The growth of third party management options is a great opportunity for hotel developers to have the best of both worlds, using a management company to run the hotel along with a brand to ensure maximum exposure and sales opportunities. The management company will hold the brand to account on delivery of business, and the brand will ensure that the management company are managing the asset efficiently, resulting in greater returns for the owner.” – Karl de Lacy, International Development Director for Best Western

SOURCEDylan Rogers
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