An Eye on West Africa

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It’s been a busy year on all fronts, but arguably more so recently. September and October have made up my personal conference season this year – first I attended the Africa Property Investment Summit (APIS) in Johannesburg, followed by the Africa Hotel Investment Forum (AHIF) in Nairobi. And I recently returned from the International Society of Hospitality Consultants’ (ISHC) annual convention in Panama. If I look at those three conferences, it’s a fairly diverse selection of events and destinations, and although it may not be immediately apparent, there is a link.

At the APIS, West Africa spent much of the time in the spotlight, particularly with regards the opportunities for retail development in the region. Whilst Angola, Mozambique and Zambia were all discussed, the Ghana and Nigeria subject matter, dubbed “the consumer play” by one of the speakers, received the most attention. In markets grossly undersupplied with formal retail, the talk centred on the number of malls, both ‘major’ and ‘neighbourhood’, that could be developed in each country. BGI Properties’ presentation at the AHIF linked this to the hotel industry.

BGI is a USA and Ghana-based developer of retail malls in West Africa. The company is convinced that there is synergy between their sector and the lodging industry. Malls planned by BGI in Accra, Kumasi, Takoradi and elsewhere in Ghana, as well as in Lagos and Abuja in Nigeria, are more likely than not to include a hotel component, alongside the normal anchor stores, line shops and service outlets such as restaurants and bars.

Mixed-use developments typically bring enhanced benefits to the owners, tenants and users, with the whole being greater than the sum of its parts. In particular, there is a clear opportunity to develop budget and economy hotels integral to a shopping mall, with the mall providing the additional services that the hotel operators would rather do without. Laundry and eateries are often seen as labour-intensive distractions to the provision of overnight accommodation. So, the café in the mall becomes the restaurant, the laundrette provides a laundry service, the shops provide the travellers’ toiletries and other essentials, and so on. And, of course, the hotel provides a useful source of traffic for the mall’s shops. Plus the marketing of the hotel includes marketing of the mall, as an attractive overnight destination.

All of this, of course, took place against the backdrop of Nairobi’s Westgate Mall tragedy, the worst ever seen in Africa. There’s no doubt that the terrorist attack there has had an effect on mall and hotel business – certainly in Nairobi itself, but possibly elsewhere as well – but let’s hope that the travel world and those who had planned to visit Kenya and other attractive African destinations see the Westgate tragedy for the isolated, self-contained incident that it was, and ensure that the intended objective, i.e. to negatively impact our industry, and society as a whole, is entirely and utterly defeated. Sure, terrorist attacks can take place anytime, anywhere, but what Kenya and Africa as a whole does not need is for the world to view the continent as a hotbed of terrorist activity (which it is not), when it still has so much to offer in both the business and leisure travel spaces.

On the issue of hotel rooms, at the ISHC conference in Panama, a presentation by Smith Travel Research revealed that Accra and Lagos have some of the highest average room rates in the world, due mostly to a lack of supply in the face of rising demand. Rising demand brings opportunities for investors at all levels of the market – the four and 5-star segments tend to see the most activity to begin with, however developers also look at the midscale and budget segments. I believe Accra and Lagos are now at this stage – ready for more 3-star hotels. These hotels provide an alternative to their higher-priced forerunners, and cater more to the domestic and regional markets.

As Accra and Lagos continue to develop, driven by the virtuous circle of a growing economy and the resultant increase in the middle class, expect to see some combined retail and lodging developments coming on stream, and new, exciting places to stay.

Trevor Ward
MD: W Hospitality Group