Tens of thousands of new hotel rooms are in the pipeline or under construction in Africa and the vast majority are business-oriented as multinational and local hoteliers rush to meet the demands of a growing influx of business travelers.
Lagos, Johannesburg, Addis Ababa, Cairo, Nairobi – capital cities and cities that are home to large business centers, government and commerce all have hospitality needs and those needs are growing, said Patrick Fitzgibbon, senior vice-president of development for Hilton Worldwide, Europe and Africa, according to a report in TheGuardianNigeria.
“We have a very bullish feel for these markets and we are very excited about the opportunity Africa presents,” Fitzgibbon said. “I think that for the next 20 years we are going to have our hands full with opportunity.”
About 40,000 new rooms in 207 hotels are planned in Africa’s under-served cities, up almost a third from 2011, according to a recent survey by Lagos-based consultancy, W Hospitality Group.
Hilton, which operates nearly 11,000 rooms in 37 properties in Africa, says it has some 5,200 rooms and 17 hotels in the pipeline across the continent.
Carlson Rezidor, which recently opened a Radisson Blu in Port Harcourt, its eighth hotel in Nigeria and 49th in the continent, is targeting 12 new hotel deals this year. French group Accor, owner of the Novotel and Ibis brands, has some 5,000 rooms in the pipeline, according to the W Hospitality survey.
“The vast majority of those hotels are business-oriented,” said Trevor Ward, managing director of W Hospitality. “If you look at where those hotel chains are primarily going, it’s the capital cities or the major commercial cities of Africa where the business traveler is going.”
According to STR Global, South Africa saw revenue per available room increase by 13.6 percent for the first two months of 2013.
However, hotel owners are looking to increase their investments in Africa as the race for the continent’s promising long-term growth prospects intensify, the report said.
With limited opportunities for expansion in South Africa, a slew of hospitality players are eyeing the rest of the continent. Feuling the scramble are upbeat economic growth prospects and not enough quality hotels.
An educational tour put together by Protea Hotel Group Group to Johannesburg shows that the brand is consolidating its foothold not only in South Africa but the entire continent where it sees great opportunity and quick return on investment.
Protea Hospitality Group has signed a deal that will see it moving into its tenth African country, Rwanda.
Protea CEO Arthur Gillis said the company has hotels under construction in Zambia, Ghana, South Africa, Nigeria and Uganda valued at $100 million-plus and it plans to expand into at least three more countries within the next couple of years.
“Africa currently has far more base development potential than just about anywhere else in the world,” Gillis said. “Numerous African economies are expanding rapidly and it’s encouraging to see gross domestic product projections of between 6 percent and 8 percent becoming reality on the back of political stability and a burning desire to create wealth.”
It is not all rosy for these hotel brands. Challenges range from overcoming infrastructure and logistics obstacles in their bids to hoist their flags across the continent.
Hotels often have to be self-sustaining, depending on satellite connectivity for fast Wi-Fi and generators for backup power, as well as having to provide their own clean water.
Yet, despite these hurdles, hotel groups remain positive about their future in Africa as the continued rise in demand and low supply in hotel rooms offer strong occupancy rates and high profit in short periods.
“These challenges we face, we quickly forget about them the day the hotel opens,” says one hotel industry expert. “Normally, we would say the hotel takes 1,000 days from the day it opens to stabilize but in a lot of these African markets it can take a couple of months to stabilize because of the high demand for hotels.”