Eye on West Africa

1220

You might think that travelling between Africa’s two largest oil producers, Nigeria and Angola, would be a piece of cake. If only.

Having obtained my visa to enter Angola, a Herculean task, I booked as direct flight from Lagos, which promised to get me to Luanda in three-and-a-half hours. I checked in online on the day of my flight, print out my boarding pass and get myself to the airport. Once there, however, I discover that my flight was cancelled. The previous day!

Two days later, I was forced to book a 14-hour journey through South Africa, with a stop in Accra to refuel.

When I arrived in Luanda, the differences between the two African oil-producers were quite marked. In Angola, where they really can be quite paranoid about foreign visitors, passport control was a breeze, with only one person seeing the need to inspect my passport. In Lagos, it’s four officials, minimum.

But travel around Angola is much more difficult than in Nigeria. I journeyed out to Cabinda, an exclave; five people checked my passport on the mainland, and another two when I arrived in Cabinda, for what was technically a domestic flight. And I needed an official letter from my client’s company to make the trip.

Mercer rates Luanda as the most expensive city in the world for an expatriate to live in, mostly due to the exorbitant cost of renting an apartment or villa. And it’s not just living there, the hotels are equally exorbitant. I stayed at one of the leading hotels and paid $400 for a room, with an average restaurant check of $150 for two, for the food alone!

Lagos has become much more expensive over the last few years, but it ain’t that high. A corporate rate at a leading hotel in Lagos runs at an average of between $250 and $280 – but at least Luanda’s rates include breakfast.

The streets in the centre of Luanda are as chaotic as they are in Lagos, mostly due to a lack of off-street parking, which clogs the roads. But you sense that the drivers are more patient than their Nigerian counterparts. Down in Luanda Sul, the city’s new and rapidly growing expansion area, there’s much less congestion, with new buildings providing the necessary parking.

There are not yet many hotels in Luanda Sul, with the exception of the Hotel Talatona, next to the convention centre. Some new builds have been planned, and I hear that Accor may soon enter the market there.

But in the CBD, there is a huge amount of activity. The 400-room hotel in Miramar, known as the Intercontinental (not the global brand) looks ready to open, and the Bikuku Alvalade hotel not far from the airport, which also looks near completion. The 370-room VIP Grand, in the Comandante Gika project, is now out of the ground. The owners of the Continental hotel are building a new 180-room hotel in Maianga, also close to the airport. The Chik Chik Hotel is under construction at the airport, and Radisson Blu have a project, not yet started, on the Ilha.

That’s a lot of new rooms. I reckon the supply could more than double in the next five years, with most of the new hotels actually under construction, and some ready to open this year.  And that’s into a market which has been badly affected by the drop in the oil price, with a direct correlation between the oil price and room occupancies. The result has been a major reduction in government and oil company spending, which means fewer travellers who require accommodation, and a real scarcity of dollars in the system.

Lagos has also been impacted by the reduced oil price, but the situation is less extreme than in Luanda. Occupancies are down, but as I said in last month’s column, the election result has brought new confidence, and there are signs of increasing travel.  And, most importantly, there is little or no new supply coming into the market in the foreseeable future. Unlike Luanda, which looks like it could be swamped with new rooms. In Lagos, The George, a 62-room boutique hotel, opened this month, and the next to open looks likely to be the 150-room Marriott, sometime in 2017 or 2018.

Unlike most markets, where increased supply means lower prices, the hotel industry doesn’t always ‘play by the rules’. Lagos hotel prices haven’t been reduced, even in the face of a 300% increase in supply in the last 10 years.  But travellers to Luanda may well benefit from the increasing supply of rooms – whilst I was there, two of the leading hotels actually reduced their published room rates, without any change on the product or its positioning, something I have never seen before. So watch this space, Luanda may not always be the most expensive city in the world.

Trevor Ward
CEO: W Hospitality