Bullish and optimistic


The world’s big hotel groups still see Africa as relatively untapped and under-supplied, and they continue to put together development pipelines that look impressive on paper, but require a greater conversion rate to make a material impact on the African hotel landscape in the short-term.

It’s been a difficult few years for some of Africa’s biggest economies, but that hasn’t stopped the world’s big hotel groups from continuing to bet big on the continent, as they continue to see value in what it has to offer.

It’s obvious that these groups are taking a long-term view on Africa, and they are happy to ride the tough times and see their – and their partners’ – investments through, provided they find the right deals and commercial models to ensure a decent return.

Before we take a look at who has made the biggest moves in the past year, in terms of hotel development and the signing of deals, it’s worth reviewing the performance of the African hotel sector in the same period, to get a sense of the type of base the industry is working off.

In this regard, HTI Consulting always provides an interesting snapshot, and its review of 2017 had some thought-provoking findings, particularly in terms of some of the African continent’s hotspots. For this report, HTI provided a brief summary of the top and bottom five performers across 14 African cities for 2017, as indicated by STR Global. Occupancy rates, average daily rates, rooms sold and future supply were all taken into account, but our focus, for now, will be on the occupancies achieved by these markets.

For starters, the report said that: “Both upward and downward trends were noticeable across the continent in 2017, with more positive conditions in West Africa as oil economies geared up in response to a recovering oil price. Political instability in several East African countries served to dampen those markets in the area, albeit on a temporary basis.”

The report, authored by HTI Consulting’s CEO Wayne Troughton, starts with a look at occupancy growth and picks out Lagos and Accra as the lead performers of the 14 African cities assessed.

“This, as gradual economic recovery in the countries of Nigeria and Ghana saw both these cities benefit from increased business demand,” said the report. “Growth in Lagos came off a low base, however, and, in light of more positive economic projections, should see future occupancy rates boosted to former highs. Strong growth in Accra propelled occupancy rates to a healthy level just above 60%. Other markets showing moderate growth included the cities of Pretoria, Durban and Windhoek, whilst Namibia’s economy revealed signs of recovery after poor economic growth in 2016.”

So, that was the good.

The bad was in the form of Kenya’s Nairobi, which was the weakest of the cities assessed, with a decline in occupancy of 11.1%. Here, according to HTI, new supply (an additional 478 rooms, of which 334 were internationally branded – Four Points by Sheraton, Park Inn by Radisson), coupled with a decline in demand due to the violence surrounding the August 2017 elections, substantially reduced accommodation demand.

Dar es Salaam (Tanzania) followed Nairobi with a decline in occupancy of 9%.

“This was driven largely by investor uncertainty in new government policy, limiting business travel to the city,” said the report. “Additionally, direct flights to key tourism destinations reduced leisure demand in Dar es Salaam.”

There were also lower occupancies in Addis Ababa (Ethiopia) and Gaborone (Botswana).

“Although supply increased in these cities, demand declined due to political unrest (Addis Ababa) and economic challenges driven by mining (Botswana),” said HTI.


That, at least, provides some sort of base to work off, although it’s unlikely to have any effect on the big international groups who have extensive development pipelines, some with fairly lengthy lead times.

“Investing in the hotel industry in Africa is a long-term play and like the rest of the world Africa also works in economic cycles,” says Andrew McLachlan, The Radisson Hotel Group’s Senior Vice-President, Business Development, Africa and Indian Ocean. “However, due to imbalance in supply and demand in many African markets we are still experiencing RevPAR growth, even though some of the bigger economies have slowed down.”

W Hospitality Group specialises in the provision of advisory services to the hotel, tourism and leisure industries, and among the range of services it provides its clients with is its annual ‘Hotel Chain Development Pipelines in Africa’ report, which looks at the development activity of the branded groups.

The 2018 version makes for interesting reading.

According to W Hospitality, Marriott International tops this year’s list for the most planned new hotel rooms under construction in Africa. The group currently has a development pipeline of 93 new hotels comprising 17,708 rooms in Africa, and almost 50% of those rooms – 8,587 – are already under construction.

“Africa makes for a very compelling story,” said Alex Kyriakidis, Marriott’s President & Managing Director Middle East & Africa, speaking late last year. “We have always believed in the potential of Africa and were the first global chain to make a significant investment in Africa with the acquisition of Protea Hotels in 2014. This was further consolidated with the acquisition of Starwood Hotels. With economic growth, a rising middle class and rapid urbanisation, the demand for travel and high-quality lodging is growing.”

Marriott’s most recent openings in 2018 include the Sheraton Bamako Hotel, which marked the group’s entry into Mali in West Africa, and the long-awaited Accra Marriott Hotel in Ghana, which is strategically located in the heart of Airport City and opposite Kotoka International Airport. It has 208 rooms, three dining venues, 800 square metres of meeting space, a pool and a fully-equipped fitness centre.

“Accra is the heartbeat of Ghana, a dynamic city bustling with energy,” says Kyriakidis. “A commercial, manufacturing, and communications centre with great shopping and excellent nightlife, it makes an interesting travel destination both for business and for leisure.”

Hilton Hotels & Resorts is ranked second on the W Hospitality report, with 6,352 rooms under construction and 54 hotels in its pipeline.

“We’ve got a very credible pipeline and the deals in there are formally signed deals, whether that’s a management agreement or a franchise agreement,” says Mike Collini, Hilton’s Vice- President Development, sub-Saharan Africa. “We don’t include letters of understanding or agreed terms. We want credibility and we recognise that some projects fall foul of funding or funding takes longer than expected, or planning permits come in. But, if something is stuck and isn’t moving, we ultimately remove it from the pipeline. It’s important to retain your credibility. Ultimately, five to eight percent of a pipeline is inactive at any stage, but there I don’t think we’re any different from our competitors.”

Like Kyriakidis and Marriott, Hilton are clear about the opportunity that Africa still presents.

“We remain extremely bullish on hotel growth and development in Africa,” says Collini. “We absolutely see the need and believe we have the right brands to meet that growing need.”

The Radisson Hotel Group is third with 4,840 rooms currently being built and an overall pipeline of 39 hotels.

“It continues to be one of the fastest-growing and most vibrant sectors of the continent’s economy,” says McLachlan. “Even with challenges like drops in oil prices, visa regulations and slowdown in global economies, the hotel sector has significant potential to create jobs and uplift inclusive economic growth across the continent.”

“We have identified 12 hotspots (tier one cities) which we strongly believe we can great scale (five-plus hotels per city) across at least four of our five brands in Africa. Our hotspots in are Cape Town, Johannesburg, Durban, Mauritius, Dar es Salaam, Nairobi, Addis Ababa, Lagos, Abuja, Accra, Abidjan and Dakar.”

According to W Hospitality, most of fourth-placed AccorHotel’s deals are fairly new, signed in 2016 and 2017, and therefore “it is not surprising that only 36% of rooms in its pipeline are under construction.”

In total, Accor has 37 hotels in its development pipeline, totalling 10,059 rooms. Louvre (16 hotels and 2,414 rooms) and Meliã (six hotels and 1,935 rooms) round off the top six, but significantly, both have all their pipeline rooms under construction. Similarly, seventh-placed Best Western (17 hotels and 1,697 rooms) has just over 91% of its pipeline rooms onsite.

Hyatt International, Moevenpick Hotels & Resorts, and InterContinental Hotels Group complete the top 10.

An interesting development in April saw Accor announce a strategic partnership with the South Africa-based Mantis Group, whereby Accor acquired a 50% stake in the group that consists of 28 managed properties, plus a global network of branded hotels and residences. Even more recently, Accor announced that it had signed an agreement with Moevenpick Holding and Kingdom Holding to acquire Moevenpick Hotels & Resorts. Moevenpick currently operates in 27 countries with 84 hotels (more than 20,000 rooms) and has a particularly strong presence in Europe and the Middle East.

Obviously, both these developments could have an impact on Accor’s future pipeline, particularly in Africa.

If one looks at an international group that doesn’t feature in W Hospitality’s top 10, it’s clear that there is plenty of additional activity out there, as well.

Swiss International Hotels & Resorts currently has 30 hotels in a pipeline that spreads over Africa, Middle East and India, and in that pipeline are eight newly-developed hotels the group plans to open in Africa by the end of 2019.

They include three properties in Kenya, four in Nigeria, and one in Uganda, across its Swiss International, Royal Swiss and Swiss Spirit Hotel & Suites brands.

“Swiss International is under discussion for additional hotel developments in Ethiopia, Ghana, Kenya, Mozambique, Nigeria, Rwanda, South Africa, Uganda, Zambia and Zimbabwe,” says CEO and President Henri Kennedie.

No surprise, then, that Swiss International are another group that are happy to bet big on the future of Africa.

“Although several countries in Africa have suffered severe economic challenges in the past couple of years, there are still encouraging signs that businesses – mainly the hospitality industry – are turning a corner,” says Kennedie. “The hospitality business and its growth have been influenced by the expansion of major international companies into Africa, the improving safety and security factors which once crippled growth in Africa, the increase in public spending mainly from the fast-growing middle class, the reliable and perfect climate, and Africa’s extensive natural landscapes, resources and untouched environment.”




1Marriott International9317,7088,58748.5%
3Radisson Hotel Group397,8684,84061.5%
5Louvre Hotels Group162,4142,414100.0%
6Meliã Hotels International61,9351,935100.0%
7Best Western Hotels & Resorts171,6971,55291.5%
8Hyatt International91,7681,18867.2%
9Mövenpick Hotels & Resorts71,5351,07570.0%
10InterContinental Hotels Group91,89185645.3%




1Radisson Hotel GroupRadisson Blu245,3183,32268.6%
3Marriott InternationalMarriott163,4382,36868.9%
4Meliá Hotels & ResortsMeliá Hotels & Resorts61,9351,935100.0%
5HiltonHilton Garden Inn172,8181,77463.0%
6Louvre Hotels GroupGolden Tulip91,6621,662100.0%
7HiltonDoubleTree by Hilton91,5171,30586.0%
9Mövenpick Hotels & ResortsMövenpick71,5351,07570.0%
10Marriott InternationalJW Marriott61,6451,03863.1%


That’s another impressive pipeline, furthering bolstering the number of hotels planned for the African continent over the next few years.

“The overall pipeline for hotel chains in Africa looks healthy for the future,” says the W Hospitality report. “Notably, Mangalis, a new hotel brand launched in 2011, has already managed to build a significant pipeline, with 1,746 rooms in 14 hotels, growing the existing portfolio of 425 rooms in three hotels by more than four times. Currently, five of the 14 hotels in the pipeline are under construction.”

But there is also a word of caution from W Hospitality’s Managing Director, Trevor Ward.

“Of the total 76,322 rooms in the African pipeline, almost 34,000 rooms are said by the chains to have scheduled openings this year and in 2019,” he says. “The reality on ground, however, is that 4,000 of those rooms were not even under construction as at the time of our data collection – which was the first quarter of 2018! It would not, therefore, be amiss of us to suggest that there is a degree of over-optimism on the part of the chains regarding their expansion plans.”

Worth noting.


If one looks at individual brands and refers back to the W Hospitality report, it’s interesting to see that Radisson Blu has the largest number of rooms under construction – beating the Hilton brand by over 300 rooms.

“The majority of our portfolio is Radisson Blu – it’s our core brand and the brand we always bring to market first,” says McLachlan. “As we continue to develop, I expect to increase the number of Park Inn by Radisson properties in countries like South Africa and Nigeria, where I can create scale within the country.”

Hilton has two other brands in the top 10 – Hilton Garden Inn and DoubleTree by Hilton – boosted by the chain’s $50 million Hilton Africa Growth Initiative, which was unveiled at the Africa Hotel Investment Forum in Kigali, Rwanda late last year.

“HAGI is intended to support the conversion of existing trading hotels into Hilton’s system, and we expect these funds to create conversion opportunities primarily for our Hilton, DoubleTree by Hilton, and Curio brands in multiple markets, including key cities, airport resorts and safari lodges,” says Collini. “Throughout the next five years, we hope to be able to secure 100 conversion opportunities (managed and franchised) with some 15-20,000 rooms to significantly grow our footprint across many countries in Africa.”

With regards Hilton Garden Inn, Hilton now has 17 properties in its pipeline and expects to open hotels under this brand in Lusaka (Zambia), Gaborone (Botswana) and Mbabane (Swaziland) this year alone.

“With all our brands, I think Hilton Garden Inn is going to grow to be the biggest over time,” says Collini. “When I identified 200 strategic targets across sub- Saharan Africa, almost a hundred of those were with Hilton Garden Inn. The reason for that is that it’s a highly effective and cost-efficient model. It’s cost-efficient to build and very efficient to operate. In terms of cost-per-key, it’s almost half of that of a Hilton-branded property. You have to go with what the market dictates, and most of these markets are showing that Hilton Garden Inn is the right brand – the most profitable and the one with the best returns.”

The rest of the brands top 10 is made up of Marriott (Marriott and JW Marriott), Meliã Hotels & Resorts, Louvre’s Golden Tulip brand, Accor’s Fairmont brand, and Moevenpick of Moevenpick Hotels & Resorts.


If one looks at the W Hospitality report, Africa’s big hotel groups are lagging behind their international counterparts, but that doesn’t mean they are inactive.

Also, a word of caution – or, at least, a different perspective on those international pipelines.

“It’s encouraging to see the interest in Africa by most of the international groups, as this is the next logical destination after Asia and will make sense for the brands to develop their footprint on the continent to service the loyalty programmes,” says Andrew Rogers, aha Hotels & Lodges Business Development Executive. “It would be most interesting to see the brands invest their own monies into the continent, as opposed to simply seeing them advance fees in the form of key monies and also see them start to take an equity stake in projects, so as to assist with developers raising the debt on new hotel projects.”

Sure, there isn’t an African group or brand in the top 10 of W Hospitality’s report, but the likes of South Africa’s City Lodge have been quietly venturing out of their shells and have started spreading their wings, albeit slowly and cautiously.

Currently, the group is putting the finishing touches to its 171- room City Lodge Hotel at Two Rivers Mall in Nairobi. The hotel opened its first phase at the beginning of this year and City Lodge says it should be fully operational by August/September. The 149-room City Lodge Hotel Dar es Salaam (Tanzania) is expected to be operational by September/October. Similarly, the 148-room City Lodge Hotel Maputo (Mozambique) is also expected to be operational by September/October.

“They are seen as part of a selected expansion drive to provide quality and affordable accommodation in parts of East and Southern Africa for mainly business (but also leisure) travellers,” says Angus Macmillan, City Lodge spokesperson.

City Lodge believes it is nicely-positioned for growth, thanks to its diverse offering of four distinct brands: Road Lodge (one-star), Town Lodge (two-star), City Lodge (three-star), and Courtyard (four-star).

“Our current focus is very much on the three-star brand, but we do see some opportunity for our other brands,” says Macmillan. “We already have a Town Lodge in Windhoek and one in Gaborone. In some countries there is really only opportunity in the capital city, but this is subject to land and building costs etc. Very few African countries offer viable development opportunities outside of their capital cities – Kenya being one of the few. Having a one-to-four-star brand portfolio, we are able to look for suitable opportunities, even if these are limited.”

City Lodge may be looking at East and Southern Africa, but BON Hotels sees the opportunity in West Africa.

BON Hotels is a South African hospitality company that owns, manages and markets hotels throughout Africa, and it has grown its Nigerian presence with the more recent acquisition of 11 additional properties. In doing so, it has increased its portfolio in West Africa to 25 hotels (although, currently, only seven are open) across 14 cities and become Nigeria’s largest and fastest-growing hotel group.

The group has also unveiled a revamped BON Hotel Abuja, with the completion of phases 1 and 2 that included a refurbishment and redecoration of the existing rooms and bathrooms, an upgrade and revamp of all the public areas, and the addition of a swimming pool, a gym and a coffee lounge.

With 14 new hotel projects underway and a further 11 being signed, BON Hotels is on track to tie up the trade routes linking Nigeria, making life a whole lot easier for commuters both local and from abroad.

The group has identified and is focusing on building a triangular city circuit incorporating trade, city and northern routes that will effectively tie up the trade routes for West Africa running through Nigeria.

The circuits include: Lagos–Abuja-Port Harcourt; Owerri–Onitswa–Asaba–Awka-Enugu; Asaba–Orca-Enugu; and Abuja–Kano–Kaduna–Zaria–Yola.

“There has been a total under-supply of international operators trading in Nigeria, due to security issues, trading difficulties, lack of knowledge and understanding of the local environment,” says Bernard Cassar, Director of BON Hotels International West Africa.

“Previously, the bigger hotel players entered the market with five-star offerings at a high price,” says Guy Stehlik, CEO of BON Hotels. “BON is bringing affordability back into the market place at the three, four and five-star international service standard hotels, which has most definitely broadened our expansion into other regions of Nigeria.”

Stehlik also has a view on property developers in Africa who embark on hotel projects without finding the right partner and doing sufficient research.

“I’ve experienced it time and time again – desperate property developers reaching out to us after the hallmark DIY steps have been exhausted on their hotel project,” he says. “Two or three trips to China’s ‘one-stop hotel design’ shops later, without taking any cognisance of developing a hotel with the markets it will serve in mind, and a few too many plunges into his own capital, funds have dried up – 30% into the project and the dream has become a nightmare.”

According to Stehlik, the most common errors occur at the offset of the design and architectural planning of the hotel.

“A common mistake, and one that I’ve seen frequently when considering projects in Africa, is poor planning of space,” says Stehlik. “Food and beverage is often a critical victim. Pool bars, roof bars, restaurants for breakfast, restaurants for lunch, coffee shops, you name it – multiple food and beverage facilities that will certainly result in a staffing, procurement and operational disaster.”

Stehlik notes that BON Hotels have often had to walk away from what could have been very successful hotel developments, because they did not see viable solutions to the project, “other than demolishing the entire building at whatever stage we found it and starting again – we have left owners dumb-founded and desperate and elected to walk away. We’ve seen some of the best locations in Africa destined for failure by inexperienced property developers.”

Also looking to grow its portfolio is aha Hotels & Lodges, and according to Rogers, the group is busy with several opportunities across the continent. They include the Kafue River Cliff Hotel & Conference Centre in Zambia, an airport hotel in Lusaka, and the Gondar Hills Resort in Ethiopia.

“The growth in Zambia is following our strategy to ideally have a presence or beachhead in major/gateway cities and then try and develop a circuit in the rest of the country,” says Rogers. “We are following mainly a tourism-driven routing into East Africa and SADC countries, where we can create demand for smaller cities and lodge-type opportunities. Ideally, we wish to be located near major routes, and together with airport mixed-use developments, allow our guests to have ease of access, various alternative offerings, and be closer to their places of work.”

Slightly less active is Legacy Hotels & Resorts, which now has a portfolio of properties across South Africa, Namibia, Zimbabwe, Nigeria, Gabon and Ghana.

In terms of development, it has plans for a 60-room hotel on the Sabi River adjacent to Kruger Park in South Africa. Phase 1 of the development is nearing completion and the next phase will be an upmarket luxury hotel on Elephant Point. Project finalisation is in progress and the projected opening date is 2020.

However, Legacy’s big project is its Leonardo development in the heart of Sandton, Johannesburg’s business district.

“That’s in progress and rising upwards rapidly,” says Legacy Hotels Managing Director Paddy Brearley. “This is a luxury mixed-use development with shops, a swimming pool, restaurant and a 2,880-metre penthouse for a mere R250-million ($18m) asking price – urban lifestyle at its best!”

Brearley also has strong views on the growing presence on the African continent of the world’s big international hotel groups.

“Africa needs growth in their economics and any additional investment by international hotel groups should be welcomed, as they hopefully bring new product and expertise to the region,” he says. “Also, for job creation and upliftment in poor areas, new hotels will add many positives to local communities.”

One African group that looks to have cashed in all its chips is Sun International, which in 2014 sold the majority of its African hotel assets to Minor International. That coincided with a renewed focus on its gaming operations, with Sun International also growing its presence in Latin America, to the extent that the group now has properties in Chile and Panama.

More recently, 2018 has seen the completion of its ambitious project at Menlyn Maine, near Pretoria, north of Johannesburg. That project started with the opening of a sprawling casino complex in April 2017, followed by the unveiling of a large events arena in October, and now wrapped up by the opening of The Maslow Time Square hotel in April.

“During the relocation of our gaming license from Morula to the city of Tshwane, we became aware that South Africa’s capital city lacked not just a casino, but also a quality hotel and convention centre,” says Zoleka Skweyiya, Sun International’s GM: Communications and Customer Insights. “We recognised it as an opportunity for us to play in what has been, until now, an unoccupied space.”

According to Skweyiya, Sun International remains open to new opportunities in the hospitality space, both in South Africa and in Latin America.

“In many respects, the African continent is virgin territory, and many hotel groups are interested in staking their claim in these new markets,” she says. “Having said that, logistically it is quite a difficult market to play in, because African countries are not homogeneous – they are individual and require unique business models based on a proper understanding of the specific terrain. But I do believe over time we will see a steady expansion into Africa.”

Steady expansion, indeed.


The international groups remain optimistic and bullish about the road ahead, in terms of hotel development, but the key is going to be concerning how many of those proposed deals and projects reach fruition. Sure, those pipelines look good on paper, but African hotel development needs a quicker conversion rate.

The groups won’t be fazed, though, as they continue to look for opportunity and strategic locations across the continent.

Where those hotspots are is often a subjective issue, but Troughton’s HTI Consulting report seems to think that Cape Town, Harare and Accra are worth keeping an eye on.

Rogers, seemingly, agrees, when it comes to Zimbabwe, as the hospitality industry looks for that country to ‘turn’ for the better.

“In terms of countries, Zimbabwe, and then gateway cities such as Harare, Victoria Falls, Addis Ababa, Dar es Salaam, Windhoek and Dodoma in Tanzania,” says Rogers.

HTI Consulting also thinks Addis Ababa is worth watching.

“The number of hotel projects under construction remains highest in Addis Ababa,” it says. “Several projects expected to come online in 2017 experienced delays and should be realised during the course of 2018. These high levels of new supply (if all completed) are set to increase pressure on an already struggling market, meaning that medium-term outlook is therefore subdued.”

The HTI report goes on to say that planned supply in Lagos and Nairobi remains high and continues to place pressure on competitors, and there’s an expected increase in supply in Accra.

All African hotel development hotspots, and all popping up on the radar of the world’s big hotel groups.

Where does it end, and how far off saturation point are we?

Seemingly, quite far, if these ambitious pipelines are to be believed.


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