Hoteliers bet on booming Africa

April 17, 2012 (The Independent) -- New research released last week from Lagos-based W Hospitality Group reveals that the hotel industry is betting big on a boom in Africa over the coming years. Virtually all the major hotel chains are making moves to increase their presence across the continent.

In total, 208 new hotels with over 38,000 rooms are planned to come onto the market in the next five years – 63 hotels with 9,612 rooms in 2012, 55 hotels with 9,356 rooms in 2013, 57 hotels with 12,296 rooms in 2014, 30 hotels with 6,060 rooms in 2015 and 3 with 750 rooms In 2016.

Overall, this represents an increase in capacity of 30% over the existing base. Of the total number of rooms in the pipelines, 55% are under construction, and the balance are in the planning and design phase.

The country receiving the greatest attention for investment is Nigeria, where 43 hotels with 6,808 rooms are planned. It is followed by the established North African tourist destinations of Morocco, with 35 hotels and 5,809 rooms, and Egypt, with 19 new hotels and 5,923 rooms.  The next countries on the list are Algeria, Tunisia, Ghana and Gabon.  Despite the problems there, Libya also features in the “top ten”, where three hotels with just over 1,000 rooms are planned.

Of the major hotel chains, Accor is the leader, with a pipeline of 36 hotels and 5,982 rooms.  It is followed by Carlson Rezidor with 25 hotels and 5,337 rooms, Hilton, with 11 hotels and 3,380 rooms, IHG with nine hotels and 2,885 rooms, Marriott with 14 hotels and 2,512 rooms, Mövenpick, with 12 hotels and 2,182 rooms and Starwood with six hotels and 2,140 rooms.

Judged against a global benchmark, economic growth in Africa is impressive. The continent was predicted by the IMF to average 6% growth in 2012, which is way ahead of Brazil (3%), Russia (3.3%) and the global average of 3.3%.

A recent report stated: “The scale and extent of Africa’s economic boom is unprecedented — albeit from a low base. Over the last decade, six of the world’s 10 fastest-growing countries were African. In eight of the last 10 years, Africa’s lion states have grown faster than Asia’s tigers. One of the fastest-growing economies in the world last year was Ghana — at a whopping 13%, compared with barely 1% in most European countries and just over 1% in America.”

While the economic overview and active hotel development activity identified by W Hospitality Group’s research makes Africa sound like the next great investment proposition, success is not straightforward.  African challenges include political risk, corruption, bureaucracy, poor infrastructure and lack of skills in the labour force.  Identifying reliable and efficient business partners is particularly critical.

Jonathan Worsley, Chairman of Bench Events, the company that organises several premium international hotel investment conferences, including the Africa Hotel Investment Forum (AHIF) says: “In business, who you know can often be as important as what you know but that is particularly true here – which is why we believe there will be value in creating an event that brings together the leaders of the African hotel industry with top international investors.”

AHIF will be held at the InterContinental Hotel, Nairobi on Sep. 25, where the agenda will focus on how to capitalise long-term on the opportunities presented by Africa and strategies to overcome the challenges.