I attended a hotel investment conference in Abu Dhabi recently, and although it focused primarily on the Gulf and Indian Ocean region, I did manage to steer some of the conversations around to Africa, given our long coastline on the Indian Ocean.
The delegates were primarily investors from the Middle East, with a smattering from the island nations such as the Maldives, Mauritius and the Seychelles. Operators in attendance included many from the Middle East, as well as a number of global players such as Starwood, Wyndham and Trump.
Rotana, based in Abu Dhabi, showed the most interest in Africa – data released by them recently shows that whilst it has only two hotels in operation in Africa currently (Sharm el Sheikh and Khartoum), it has a pipeline of deals signed to manage new hotels in no fewer than 10 locations with over 2,400 rooms between them. That’s a far bigger pipeline than many of the international chains.
Here in West Africa, it will be opening in Nouakchott and Lagos, with other cities such as Kinshasa on the list. Interestingly, it have succeeded in signing a deal in Luanda, where virtually every other chain has tried, and failed, to set foot on Angolan soil.
Rotana are not investors, but it can mobilise funds for hotel construction from the Middle East, and it is noticeable that investors from this region are showing more interest in Africa. East Africa has received most interest, due to proximity and historical ties (did you know that Zanzibar was once part of Oman?) The Saudi-owned Aujan Group, through Rani Resorts, has several investments in Mozambique; UAE-based Albwardy Investments is in Tanzania with three hotels, as well as Ethiopia, South Africa and the Indian Ocean; and Kingdom Hotels, Dubai-based and Saudi-owned, has invested throughout the continent, in Kenya, Tanzania, Zambia, Morocco and others.
In West Africa, Kingdom Hotels have developed and owns the Mövenpick Hotel in Accra, which it has recently put on the market, seeking to exit that investment. Why? According to David Harper of Hotel Partners Africa, an expert in hotel transactions in Africa, “Kingdom is a very experienced investor in hotels, and has identified that the time is right to realise its gains from this asset, a time when interest from buyers will be high. The agents have indeed confirmed that they are receiving interest from around the world”.
Eagle Hills, a UAE-based private real estate investment and development company, with close links to Emaar, is investing in Centenary City in Abuja. Located between the city centre and the airport, Centenary City is described by Eagle Hills as a “premier lifestyle free-zone development”, and is to include the luxury 200-room The Address Hotel Abuja. The brand is owned by Emaar, and this will be its first location in Africa.
Apart from Kingdom and Eagle Hills, however, Middle East interest in investing in hotels in West Africa has been muted, certainly compared to their interest in East Africa. I put that down to perceptions of risk, as well as, perhaps, language.
East Africa has a much more mature tourism industry, with Kenya, Tanzania and Mozambique three of the leaders on the continent. West Africa is more fragmented with a large number of French-speaking countries, which can perhaps be a deterrent to investors from other parts of the world. It is interesting that Kingdom’s one and only foray into the region was to Ghana, which has long been seen as one of the ‘Africa-lite’ countries, where it is easier to do business in than Nigeria, and with impressive economic growth even before the discovery of oil. Many countries in West Africa, small and not-so-small, are just too, well, small for major investments, particularly from another continent.
I believe that there can be more interest from Middle East investors in the future, most likely in mixed-use developments in Lagos and Abuja. Eagle Hills is paving the way in that regard in Abuja, and there are several planned mega-projects, such as the Abuja City Centre, and the Heart of the City project, which can be planned to be attractive to foreign investors, with sufficient scale to enable mitigation of their risk.
At present, however, attracting foreign investment from anywhere is extremely difficult. With their experience of investing throughout their own region, as well as globally, Middle East investors are extremely savvy, and whilst the level of risk is most often dependent on which angle it is perceived from, the risks in (mainly) Nigeria are presently very high, particularly relating to the uncertainty regarding the exchange rate. And until it has stablised, investors will not take the plunge.
Regardless of whether or not the naira devalues, the opportunities are ever-present throughout West Africa, and I believe that we will definitely see more Eagle Hills-type projects, sooner or later.
Trevor WardCEO: W Hospitality
