The times are changing in the hotel industry in West Africa. Looks like we’re back in a growth phase again, driven by improving economies and better governance. But before I look at the macro-picture, some surprising news from Nigeria – in January four leading hotels underwent changes of management and/or brand.
First there was the Le Meridien resort in Ibom, in Akwa Ibom State, one of the very few international-quality golf resorts in the country. Opened in 2007, Starwood’s management agreement came to an end in late 2017, and they withdrew at the end of the year. The hotel, renamed the Ibom Hotel & Golf Resort, now has Ronald Stilting as the General Manager, who is running it on behalf of the owner, the state government.
The Renaissance Hotel in Ikeja rebranded as a Radisson Blu hotel. The owners decided to part company with Marriott, owner of the Renaissance brand, and team up instead with Carlson Rezidor, which already has a Radisson Blu hotel in Victoria Island.
The former Leadway Hotel in Ikeja reopened in January as L’Eola Hotel, managed by the Mantis Collection. The hotel was, at one time, a Protea-branded property, then the owners ran it themselves as an independent hotel for a while, but after an extensive renovation decided once again to engage a professional management company and delegate the operation to them.
InterContinental left its hotel in Victoria Island, having terminated the management agreement with the owners, Milan Industries, which went into receivership back in May last year. The hotel has now been rebranded as the Lagos Continental Hotel.
Elsewhere in the region, Radisson Blu left its Lomé hotel in the middle of last year, which has been independent ever since, and reverted to its old name, the Hotel 2 Fevrier.
This change of guard is less of a trend and more of a coincidence that they all happened at the same time.
These are challenging times for all concerned – the owners, the staff, the guests, the suppliers et al – because any change brings uncertainty about how it will pan out. But this is nothing new; it is a not-uncommon occurrence in the USA, where guests quite often go to sleep in a Sheraton, and wake up in a Hilton. And it has happened before in Nigeria – the famous Eko Hotel in Victoria Island opened originally as a Holiday Inn, and had been managed by Le Meridien and Accor, until the owners gave up the branding business for good in 2004 and have managed it themselves for almost 15 years.
Hotels are complicated, which comes as quite a surprise to many owners, who previously had experience only of the front of house, and none of what is sometimes called the ‘heart of house’ – what goes on behind those doors marked ‘Staff Only’. The owners of the Ibom Hotel & Golf Resort and the Lagos Continental Hotel will find that they have a lot to learn about the intricacies of hotel management, and that they need to spend a great deal more time on site, much more than when they had a management company in charge, in order to ensure smooth and profitable operations. The owners of the Radisson Blu and L’Eola in Ikeja have decided to stick to the third party management company model. We wish all of them, whichever model they have adopted, every success as they deal with these substantial changes.
What will they find out there in the market? It’s been a tough three years in West Africa, since the tragedy of the Ebola pandemic in 2014, followed by the decrease in the price of oil later that year and getting worse in 2015/16. Conditions in each country in the region are different, but Nigeria was particularly badly hit, and only came out of recession in the middle of 2017. We saw encouraging signs of a small-scale recovery towards the end of last year, and by some accounts demand for hotel rooms in Lagos was up 16% in 2017 compared with the year before – but that shows just how awful 2016 was.
The fundamentals are looking good for 2018 – we need confidence, stability and growth, all three of course being inter-related, and that’s what we have as I write this in January. In the recently-published World Bank survey, Global Economic Prospects, almost every country in West Africa is forecast to have GDP growth this year of above 5%, with Ghana at an astonishing 8.3%, way above the SSA average of 3.2%. Sadly, Nigeria is the laggard at just 2.5% GDP growth, but that’s better than where we were two years ago.
GDP growth isn’t everything. It depends on the quality of growth, and GDP growth per capita, but it’s a good metric to have in mind. We know that there’s a close correlation between GDP growth and hotel demand. That growth needs to translate into higher GDP per capita, and that means creating jobs. Lots of jobs.
I have several times described Africa as the ‘rollercoaster’ continent, and anything could happen to knock this growth off course. But for the moment we believe we are on the way up again, and expect at least a few years of solid performance – a recent survey we undertook showed a majority of hotel owners and managers in West Africa are more optimistic about the future than they have been since 2014.
Long may it continue!