As I write this, I’ve just gotten back from the International Hotel Investment Forum, held every year in Berlin. The IHIF started out as a European-focused event, but is now very much international, and that includes Africa, which is featuring more and more on the programme, and in the delegate mix. I was proud to be one of 11 attendees from Nigeria this year, and I spotted Ghanaians, South Africans and Zimbabweans there as well. That’s not all – no fewer than three African ministers of tourism were there, from Burundi, Cote d’Ivoire and Nigeria!
Whilst in Berlin, we held the advisory board meeting for the Africa Hotel Investment Forum – to be held in Nairobi in September – and it was attended by two of those ministers, which was encouraging, as every bit of government support is crucial. We discussed the difficulties faced by hotel developers trying to get new hotels built and open for business, some of which the tourism ministers can solve themselves, and some of which needs lobbying at the highest government levels.
We also launched our Hotel Chain Development Pipeline Survey 2013, which is our annual survey that tracks what deals the international and regional chains have signed in Africa. Our 2013 survey shows that, in the sample of 29 chains who contributed this year, the number of hotels is up from 177 signed deals in 2012 to 207 deals at the beginning of this year, and an increase in the number of rooms from 34,000 to almost 40,000. That’s an increase of over 16%. This is at a time when data produced by STR Global shows an increase of just 4% in the European pipeline and 8.6% in Asia-Pacific.
Nigeria and Egypt lead the way in the number of rooms in signed deals, with approximately 7,500 rooms each. However, Egypt has far more rooms actually under construction – 85% of the pipeline, compared with 44% in Nigeria. South Africa has just 1,320 new rooms in eight hotels signed by the international chains – perhaps a reflection that the 2010 World Cup hangover is still having a dampening effect on hotel development there.
Hilton Worldwide leads the field, with its Hilton, DoubleTree by Hilton and Garden Inn brands, in terms of the number of rooms in new signed deals, closely followed by Carlson Rezidor, with Radisson Blu, Park Inn by Radisson and Missoni. Hilton also leads in terms of brand, with 5,900 rooms in the pipeline, with Carlson Rezidor’s Radisson Blu second at about 4,200 rooms.
Noticeably, and as discussed in a recent piece, the South African chains are still being left behind, and whilst the likes of Protea and Tsogo Sun may dominate their home market, it is clear that they are not going to be the leaders elsewhere in Africa, where the international chains are forging ahead, at least as far as signed deals are concerned.
Several of the international hotel chains now have business development executives based in Africa, and their efforts are paying off. Not only are they signing agreements, but they are also working harder to get the deals done, by assisting with financing hotel development – not necessarily totally with their own balance sheets, but through multi-party funds, such as Carlson Rezidor’s AfriNord, which can provide ‘mezzanine finance’ to fill that last, difficult gap in the funding structure.
The time has never been better to work in Africa, and it is clear that the international hotel chains are entering the market strongly – not just reacting to enquiries, but actively making those deals work, and taking advantage of the social and economic metrics that point to massive growth in Africa’s economy.
Those investment conferences, in Berlin, Nairobi and elsewhere in Africa, are contributing to the development of the African hotel industry, by bringing together investors, operators and, yes, ministers of tourism, to enhance understanding of the industry, and to encourage new deals.
See you in Nairobi?
Trevor Ward – MD: W Hospitality Group