Q&A: Continued investment

Along with the likes of Hilton and Marriott, the Rezidor Hotel Group has one of the most aggressive African hotel development pipelines, and the man at the forefront of that is Andrew McLachlan, the group's Senior Vice-President, Business Development, Africa & Indian Ocean. Here he updates Business Traveller Africa on Rezidor's progress.

Q: What’s your view on the current state of the African hotel industry?

A: It continues to be one of the fastest-growing and most vibrant sectors of the continent’s economy. 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.

Q: Where have you already opened hotels in Africa in 2017, and what else is due to open this year?

A: We have opened three hotels in South Africa which includes Radisson Blu Hotel & Residence in Cape Town, a Park Inn by Radisson in Polokwane and our first Radisson RED in Africa, in Cape Town’s V&A Waterfront. We also opened two Park Inn by Radissons in East Africa – in Nairobi and Kigali – and entered Ndjamena (Chad) with a Radisson Blu.

Q: Are you concerned by the current poor performance of some of Africa’s biggest economies, such as South Africa, Nigeria and Kenya?

A: 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. 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.

Q: What do you consider the current African hotel development hotspots?

A: We have identified 12 hotspots (tier one cities) where we strongly believe we can create 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.

Q: Are there certain Rezidor brands you feel are a better fit for Africa?

A: Today, 72% of our portfolio is Radisson Blu – it’s our core brand and the brand we always bring to market first. As we continue to develop I expect to increase the number of Park Inn by Radisson in countries like South Africa and Nigeria where I can create scale within the country.

Q: You recently opened Africa’s first Radisson Red in Cape Town. Why this brand and why Cape Town?

A: We wanted to create a brand that would provide a greater return on investment for a hotel owner, and one that would be relevant to tomorrow’s customer, as well as bring about a bit of a revolution in the hotel market space. Cape Town presented an ideal opportunity to launch this brand as it’s a city full of hipsters, within a popular tourism site and neighbour to the Zeitz Mocaa art gallery.

Q: Can Africa look forward to other ‘new’ Rezidor brands in the next few years?

A: I am excited to be bringing two additional brands to Africa in 2018. Sadly, I cannot share the new brands with you are as we have a global announcement and launch planned in Q1 2018.

Q: What are your thoughts on the African mid-market hotel space?

A: As guests we all want to pay less for a hotel room night and that’s the attraction of mid-market. In mature markets, mid-market and economy hotels and low-cost airlines have experienced significant growth. I expect this trend to be followed in select markets in Africa within cities or locations where a hotel can outsource a lot of its function so the hotel can operate like a true mid-market property, and guests have choices of restaurants, bars and office facilities outside the hotel. In cities where there is no option to outsource and the hotel has to have its own laundry, bakery, butchery, restaurants and bars, the size of the hotel facilities become so large and expensive to build that it does not make financial sense to position the hotel as midscale hotel with cheaper rates. In these cases we would look to position and operate the hotel as a full service Radisson Blu. South Africa and its bordering neighbours, Kenya, and Nigeria have great potential for our full-service midscale brand Park Inn by Radisson.

Q: What is ‘Destination 2022’?

A: Destination 2022 is our new five-year global strategy with many great initiatives and investments fuelling growth in hotel revenues and profit and scale in number of hotels and rooms, with the vision to become one of the top three hotel companies in the world and the company of choice for guests, owners and talent.

Q: Where do you want Rezidor’s African hotel presence to be in 10 years’ time?

A: Today we have 80 hotels (17,277 rooms) in 30 countries across Africa. We have the ambition in the next 10 years to grow our African portfolio to 175 hotels (38,000 rooms) in 40 countries across Africa. We have the tools and resources available to meet and exceed this ambition.