An Eye on West Africa

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There is no doubt that the arrival of so-called disruptive business models like Uber and Airbnb has generated more heated discussions on government regulation, ethics and the limits of free enterprise than any business model in history. Not surprising, as these business models question the very foundations of commerce as we have always experienced it. Well… as we have always experienced it… that’s probably a very subjective statement given that we evolved from trading by barter to the use of standardised, universally-accepted currency, a change which must have been quite disruptive in its days.

So what exactly is disruptive about renting an apartment in Arequito, Bansko or Calapan, anyway? I’ll wager my $10 that you’d be hard pressed even to find these cities on a map. But that’s the point. From a consumer’s perspective, perhaps a disruptive business model is what is needed to find flexible, convenient and affordable accommodation in a little corner of the world. That’s the whole idea. Airbnb, quite simply, is a means for homeowners to connect with bargain seekers for short stay accommodation. The statistics bear witness to the fact that more and more people are buying into the idea. Airbnb currently operates in 191 countries (heck, there are only 196) with in excess of 200 million users to date. That’s roughly the population of Brazil!

And where does Africa feature in all of this? There are an estimated 77,000 property listings in Africa, according to Airbnb CEO Brian Chesky. With around 17 countries in Africa operating on the Airbnb platform, South Africa is by far the largest market, where the concept has had a presence since 2015. Today the list of African locations includes a host of cities in Kenya, Morocco, Nigeria, Ghana, Mozambique, Namibia, Rwanda…and yes, even Somalia. Talk about expanding a global brand into the unknown – as many people refer to business in Africa.

If South Africa is the key player, what do the numbers say about the West African region? Well, there are an estimated 2,600 properties listed in the sub-region, with new ones added on a daily basis. When you look at W Hospitality Group’s 2017 dataset of rooms in the hotel chain development pipeline in West Africa, it stands at a little over 20,000. Working the maths, that means that the since the launch of Airbnb on the continent in 2015, the platform has grown to be over 10% of the planned hotel rooms. If the number of listings continues to rise as is predicted, then in the next two years Airbnb could be a significant competitor for the traditional hotel sector.

There are questions about how sustainable this model is, but also several reasons why Airbnb will continue to work in Africa. The opportunity for homeowners, up-and-coming entrepreneurs, to share easily in the economic benefits of a global brand by offering their apartments is one, bringing income direct to the individual. Nigeria, for instance, has one of the youngest tech-savvy demographics in the world, and can readily take advantage of an online business platform such as Airbnb. Secondly, adventure seekers can have a real feel of what life is like in Africa at the grass roots, living ‘just like the locals’. And not every city has a hotel that appeals to the international traveller, so with Airbnb visitors have access to secure and trusted accommodation almost wherever they choose to travel. Nicola D’Elia, Airbnb’s Regional Manager for Africa and Middle East comments: “We want to bring tourists to parts of the continent that aren’t covered by traditional accommodations — only places where you could stay in other people’s homes”.

The highly successful model of sharing one’s personal space with virtual strangers can raise issues, at least in more developed countries. In an age when terror attacks are frequent, communities which now find themselves hosting strangers, who have no ties nor accountability to those communities, express concerns relating to the safety and security of their permanent residents. This is, of course, not only an African issue – the Department of Business Affairs and Consumer Protection in Chicago recently announced plans to register Airbnb hosts, with penalties for non-compliance.

Opposition from governments has been rising over the years, as the number of Airbnb listings increases. Evidence of this was clearly shown recently with new legislation passed in New York protecting local housing, a move which is set to redefine the very business model on which Airbnb is built. The main reason for the Nee York law was the misuse of Airbnb by commercial landlords, and the loss of badly-needed residential space in the city centre. Such regulation has been seen in other cities such as Berlin and even San Francisco, the home of Airbnb.

And the hotel sector complains about the entry into the market of accommodation providers who are not regulated, encounter very few barriers to entry, and are largely untaxed.

Whilst Airbnb claims to be increasing its penetration of the corporate market, its real role in Africa is to expand the reach of product available to the leisure market. Sadly, many traditional hotels which are ‘off the beaten track’ in West Africa are sometimes unappealing even to the hardy backpacker, and the home stay, with an endorsement from Airbnb, has the potential to readily fill that gap, without the capital investment required to build a new hotel.