Hotel chains pile in to tap sub-Saharan growth

The International Monetary Fund is forecasting economic growth of around 5.8 percent in sub-Saharan Africa this year, second only to developing Asia, and the hospitality industry is keen to tap that growth.

Hotel chains pile in to tap sub-Saharan growth

World Bulletin/News Desk

New hotels are springing up across Africa, despite the trials of bureaucratic delay and poor infrastructure, to take advantage of an increasing number of tourists and business travellers serving a growing middle class.

The International Monetary Fund is forecasting economic growth of around 5.8 percent in sub-Saharan Africa this year, second only to developing Asia, and the hospitality industry is keen to tap that growth.

Tourism arrivals to Africa rose 6 percent in 2012 to a record 52 million, driven by a rebound in North Africa and growth in sub-Saharan destinations, according to figures from the UN World Tourism Organization.

New hotel rooms planned on the continent are up 16 percent on last year, according to consultancy W Hospitality Group.

The Hilton chain is among those wanting to expand in places like South Africa, Ethiopia, Tanzania and Angola.

"There has been improved political stability, improved investment from governments, and when you get those kinds of conditions tied with some reasonably strong economic growth, it is ripe for hotel investment," the group's EMEA head, Simon Vincent, told Reuters in Berlin.

Marriott International CEO Arne Sorenson said his group was looking at Nigeria, Ethiopia, Kenya and South Africa. "All seem to be pretty attractive markets, and many are starved of hotel rooms," he said.


Putting up a hotel in Africa is not a simple business, though; they have to be self-sufficient, with their own water filtration systems and back-up power, and infrastructure problems can delay the construction process by several years.

In sub-Saharan Africa, for example, the proportion of the road network that is paved stands at just 17.6 percent, not much better than the 16.4 percent figure for 2006, according to data from Euromonitor.

"While there's a great growth opportunity in Africa, it does remain a challenging market," Frits van Paasschen from upscale hotel group Starwood told Reuters.

Both Starwood and Marriott said even seemingly easy tasks like getting furniture and fixtures into the country can cause headaches due to problems with supply chains, logistics issues and paperwork for imports.

"We probably underestimated the time it would take get materials to the hotels and across borders, along with the general fit-out time," said Jeff Strachan, VP Sales & Marketing, Middle East & Africa at Marriott.

Two of Marriott's hotels in Rwanda and Ghana are now expected to open within the next 12 months, after their initial opening dates were delayed from 2011 and 2012.

Work on a Hilton hotel near the airport in Lagos, Nigeria, has also been halted after the airport authority complained about the hotel's position under the flight path, according to local media reports.

Hilton said it could not comment on the approval process.

Even so, in Accra, for example, several chains have opened new hotels over the last few years, Best Western, Moevenpick and Holiday Inn among them. Several more are scheduled to open this year.

Luanda, the seaside capital of oil-rich Angola, is also in the grips of a construction frenzy. An army of cranes punctures the skyline and smart new apartment blocks, shopping centres and hotels are taking shape beneath scaffolding cocoons alongside colonial-era buildings of a city that was known under Portuguese rule as the 'Rio of Africa'.

Billboards announce projects from an array of construction companies such as China's CITIC, Somague, Mota-Engil and Teixeira Duarte from Portugal and Odebrecht of Brazil, all chasing lucrative contracts in a state with oil revenue to spend.

Materials companies follow hot on their heels.

German cement firm Heidelberg Cement is investing $400 million in the region. It announced last week plans for a new $30 million cement mill in Takoradi, Ghana, just three months after opening a mill near Accra.


To the north in Libya, developing a tourism industry forms part of its rebuilding strategy after the uprising that overthrew dictator Muammar Gaddafi in 2011.

Earlier this month Libya had a stand in Berlin at the ITB, the world's largest travel fair, adorned with pictures of its ancient Roman ruins. While a band played traditional music, tour companies pitched their offerings.

"We would like to show the new face of Libya, and it's free. You can smell the freedom," said Salem Azabi, manager of the Marhaba Libya company, which was advertising its tour packages to the country's lakes and archaeological sites.

It is still early days, however, and continuing security incidents, such as a shooting at a gas complex west of Tripoli earlier this month, will not help.

"Even though there is not tourism to Libya at the moment, the country is interested in getting to a point in the medium term where tourism will be possible," said Martin Buck, organiser of the ITB.

While Marriott is still waiting to reopen a hotel in Tripoli that was damaged during the uprising, others are moving fast.

"In Libya we've just picked up a luxury hotel development from where it left off after a two-year hiatus," said John Sipling from law firm BLP's hospitality section. "It's as if the uprising never happened."

Güncelleme Tarihi: 20 Mart 2013, 17:30