Africa’s hotel market is growing fast – but make sure you get the fundamentals right.
Around the lush courtyard the buffet queue snaked, its makeup an intriguing mix of NGO types, suited businessmen, little old ladies in trainers and slightly bewildered locals. The Bronte Hotel in Harare’s Avenues city centre district is back in business, cashing in as the world prepares for Zimbabwe’s reinvention.
The Bronte’s fortune echoes a trend across the continent, as Africa’s continued commodities boom attracts a global audience. But Africa, so the saying goes, is not for sissies, and things are not rosy for everyone. The next few years are going to be tough ones for tourism, locally, regionally and internationally. Africa faces an extended World Cup hangover as well as the ongoing global slowdown that continues to eat into disposable income. To underline this, the latest data from The Regions Tourism Business Council of South Africa (RTBCSA) shows a significant drop in traffic to South Africa and, by extension, the region. Its new TBI (Tourism Business Index) revealed that accommodation businesses have had a poor quarter and are operating well below normal performance levels. TBCSA CEO, Mmatšatši Marobe remarked that ‘we still have a long way to go before we see any signs of improvement’.
Yet for all the forecasts of belt-tightening and dark clouds, African hoteliers and operators have more to cheer about than most. The continent-wide commodity boom means rooms are in demand. A key strategy, therefore, has been to concentrate increasingly on business hotels and customers. To this end, a multitude of new properties have sprung up across the continent and others have adapted their businesses, keen to take advantage of the African Spring. The new growth is largely concentrated in hubs around commodity deposits, in the west around Nigeria, Ghana and Sierra Leone (oil), the central countries of Zambia, Tanzania, Congo and Zimbabwe (ore), and the Indian Ocean hub around Kenya, Mozambique, Zanzibar, Madagascar and Mauritius (free trade zones).
Though many hotel groups have a long history in Africa – the Meikles Group, Southern Sun – other large corporates are just now finding benefit – Best Western, for example. The Rezidor Group (Radisson and Hilton brands among others) plan to add 15 more African properties to their existing 27 in the next two years, notably new Radisson Blu and Park Inn hotels in Ghana, Sierra Leone, Mozambique, Ethiopia and Nigeria. Both Legacy and Southern Sun plan to add value to their five respective properties, InterContinental have new properties on the cards for Angola and Nigeria, Best Western have finally entered Africa on both east and west coasts and Starwood (Sheraton and Westin) are seeing strong growth, particularly in West Africa. Protea Hotels, with 34 African hotels outside South Africa, has seen the fastest growth of all in the shortest time.
But getting hotels ‘right’ in Africa is no mean feat. There are pitfalls and challenges specific to Africa, as well as plenty of competition. “There are so many new business hotels that have come up over the last few years,” said Gareth Brown, Marketing Communications Manager of InterContinental Hotels. “It means a lot more competition. We are all fighting for the same business.” On a micro level, the things that make a good business hotel are capacity, location, facilities, efficiency, cleanliness, rates and laterally, atmosphere. On a macro level it is all about strong brands, operational excellence, and the ability to attract faithful guests.
Beyond that, though, gaps are also opening up for different types of properties, such as boutique hotels for the more discerning business traveller. The Fusion Boutique Hotel in Polokwane, South Africa is a good example and even though it’s a fair drive from Pretoria and Johannesburg, the hotel is seeing enough traffic, thanks to it’s unique location and five-star offering. Likewise another five-star hotel in the Palazzo Montecasino, although for different reasons. Whilst ‘elegance and sophistication’ would adequately describe this property in the north of Johannesburg, it’s the overall experience the Montecasino precinct offers, in the form of its casino and entertainment complex, that does a lot for it’s appeal to both the business and leisure market.
Back at the Bronte, one thing is obvious – capacity. Traditionally, many of the capitals – the older areas of operation – have older hotels with infrastructure based around tourism rather than business travellers. Flipping the emphasis is rarely easy, so many first-time operators choose instead to build from scratch. Where revamps and conversions are necessary the emphasis is on conference space and public areas. This points to a need for meeting space – critically short in urban African capitals – and less of an emphasis on latest contemporary room design. Leisure, however, is very important – hotels that succeed are embedded in local communities and offer them first-rate restaurant, meeting and drinking facilities, such as the Cape Town Waterfront’s Cape Grace, with its locally popular Bascule whisky, wine and cocktail bar. Mulombe restaurant at the Protea Hotel Chipata is another example. The Zambian property feeds the border traffic for Malawi and the relaxation aspect is crucial. So, too, the historic Platform 1 restaurant at the Swakopmund Hotel and Entertainment Centre in Namibia. Town being as small as it is – businesses still habitually close for lunch – the hotel bar, restaurant, casino and golf course are important recreation hubs.
Another area of critical attention is in technology, challenging in environments that may have no broadband or even reliable telephone services. The solution, as at Southern Sun Maputo and the new Radisson in Ethiopia, is as self-reliant a system as possible, backed up by a generator. Technology concerns point to a broader issue, that of the reliability of infrastructure and services. Even in growth areas such as Victoria Island in Nigeria, Lusaka or Nairobi, reliable electricity and water delivery is often an issue. Business hotels operating efficiently likely need their own generators, reservoirs, pumps and filtration systems. Cost becomes a problem, but factored in at building phase, it characteristically works out more cost effective than coping with cancellations due to interrupted service.
In the area of sustainability and best practice, it is often difficult to match global best practice to specific sites within an African country. This extends beyond getting reliable suppliers of food and other consumables, into the area of recent preoccupations such as recycling and ‘footprint sizes’. Though no hotel group is likely to admit that its best practice in Dar es Salaam or Accra, for example, is the same as London or Cape Town, the truth is it isn’t, but the challenge is to minimise the discrepancy.
Sometimes, successful hotels are difficult to spot and not necessarily the most visible. Older hotels in Africa for example, tend to be well run. New hotels often need systems tweaks. A truly successful hotel is, therefore, either a carefully updated property, such as Sandton Sun in Johannesburg, or a very well-researched new one, such as the Sankara Nairobi, which was recently named among Fortune’s top business hotels. Technology played a crucial role in the choice. It boasts free hotelwide wireless Internet and ‘plug and play’ panels in every room.
Both properties are also prime examples of another critical criteria – location. The Sandton Sun is within walking distance of the Johannesburg Stock Exchange, while the Sankara is in Westlands, Nairobi, the capital’s business hub. The Labourdonnais Waterfront Hotel in Mauritius and the InterContinental Johannesburg Sandton Towers, both World Luxury Hotel Award winners in 2010, are other examples, both in national financial districts. Facilities are just as important. The Westin Cape Town, winner of World Travel Awards’ Africa’s Leading Meetings and Conference Hotel 2010, managed the accolade by offering sophisticated conference and banqueting facilities, including a pioneering self-selector menu option for participants. Its position attached to the Cape Town International Convention Centre helped too.
A business hotel must also make business sense. Frits van Paasschen, CEO of Starwood Hotels and Resorts Worldwide, told shareholders recently that the three ‘musts’ for a hotel group to succeed in a new market are a varied portfolio of brands, operational excellence, and the ability to attract faithful guests. “Compelling brands…create emotional connections and return business with travellers. Each brand is distinctive so there’s no brand blur. This means we can add hotels of different brands in the same market, and they complement rather than compete with each other. All this enables us to drive even more growth.”
Operational excellence, as Van Paasschen notes, is critical, and it’s here that Africa can be a challenge. Training programmes for staff, salespeople, suppliers – everyone associated with a property – are almost as important as the building itself and should, in his view, be given equal funding. “Experienced, motivated teams ultimately mean better returns”, he says. Innovation is key says Gareth Brown, Marketing Communications Manager of InterContinental Hotels. “We have to be more innovative than the competition. An example is our OR Tambo property, which is fully soundproof. Staff are trained to respect the quiet day and night, because our guests are resting around the clock.”
On the final point, keeping faithful customers or ‘affluent heads in heavenly beds’ as Van Paasschen puts it, loyalty cards and incentive programmes are key. Examples such as Protea Hotel’s ProKard, Southern Sun’s Frequent Guest and Starwood’s SPG all aim to lock in return customers with benefits and rewards. Increasingly, this is becoming a critical area of operation, with programmes expanding to include other sectors, such as air miles and shopping discounts.
When all is said and done, the challenges facing African hotels and hoteliers are entirely manageable. The continent has, data confirms, bucked the trend and developed at a rapid rate, and continues to do so, albeit from a low base. The technology leap that has broadly benefited education and telecommunications will laterally benefit the hotel industry. So, too, will the formal retail explosion, which has pioneered development hubs. With connectivity and aspirant markets comes knowledge, the real winner in globalisation. And knowledge is the greatest asset in the hotel industry. Bring on the future.
Peter Frost