Hotel developers in built-out South Africa are scrambling to fill a void in the rest of Africa, where robust growth created opportunities for new hotels, according to a report in Business Day Live.
In South Africa, new hotel developments slowed after the 2010 Soccer World Cup, with falling occupancy and an oversupply of rooms. Most hotel activity has been focused on refurbishments, the report says. One exception is Hilton Worldwide, which brought two new brands to South Africa since November: the Conrad Pezula Resort & Spa in Knysna and DoubleTree by Hilton Cape Town Upper Eastside.
But while the pickings are rich elsewhere on the continent, Africa is not an easy place to do business, one hotel builder says. Poor infrastructure and difficulty finding local sources for items needed in hotels can slow the process and make it expensive to build hotels in Africa.
South Africa-based Protea Hospitality Group is about to enter Rwanda, the 10th African country where it does business, it announced last week.
Arthur Gillis has hotels under construction in Zambia, Ghana, South Africa, Nigeria and Uganda in excess of $100 million with more planned in at least three other African countries in the next couple of years, according to Business Day Live.
“Africa … currently has far more base development potential than just about anywhere else in the world,” said CEO Arthur Gillis.
Leading the hotel-building boom are Hilton Worldwide, with 6,230 rooms in its African pipeline; Carlson Rezidor, with 5,947; Accor, with 5,165; and Marriott, with 3,900, according to research by W Hospitality Group this year, the report says.
“Global investors are looking at the continent in a much more serious and sophisticated way,” said W Hospitality Managing Director Trevor Ward, describing a boom in African hotel building. “We are being contacted by an increasing number of dedicated investment funds seeking to enter the African hotel market.”
New hotel brands in Africa include Campanile, Dusit, easyHotel, Fairmont, Hyatt Place and W Hotels Worldwide, the report says.
The biggest challenge in building a hotel in Africa can be the time it takes, says Andrew McLachlan, vice president of business development for Carlson Rezidor Hotel Group, in a Business Day Live report.
Carlson Rezidor’s brands include Radisson Blu and Park Inn by Radisson. The company established an Africa office in 2007 in South Africa and since then has increased its African portfolio from eight hotels in five countries to 50 hotels open or in development in 21 countries including Mozambique and Cote d’Ivoire.
“In South Africa, we expect a new hotel of 200 rooms should open 18 to 24 months after construction commences,” McLachlan said in the report. “In certain parts of sub-Saharan Africa, the construction period can double, which makes the overall cost of the development very expensive. In addition, many items in a new hotel are not sourced locally so they need to be imported and with poor harbor and road infrastructure the logistics presents its own unique challenges.”
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