Who Are The Local Players In African Hotels?

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Written by Dana Sanchez

The number of hotel chain deals signed in sub-Saharan Africa in 2014 exceeded those signed in North Africa for the first time since 2009, according to a report in BusinessTravelNews.

That’s the year Lagos-based research firm W Hospitality Group started surveying African hotel development.

The major players to watch locally in African hotel development include Protea; Tsogo Sun; the City Lodge Hotel Group (a specialist hotel group in the select-service market); Sun International; and Peermont Hotels.

“With local brands, there’s Three Cities, and that’s pretty much it,” said Mmatšatši Ramawela, CEO of the Tourism Business Council of South Africa, in an interview with BusinessTravelNews. “The other guys are very small.”

Marriott-Protea purchase changed Africa’s hotel landscape

Marriott’s purchase of Protea hotels changed the landscape of hotel ownership in South Africa and the continent, Ramawela said. That’s because Protea had the biggest footprint of hotels on the continent with hotels as far as Ghana, Nigeria, Uganda, Tanzania and Zimbabwe. “Marriott has bought that market share domination that Protea has, and they can only improve as far as deals they can have across the continent.”

Sun International Divests of international hotel ownership

Sun International has offloaded its hotel component in international operations, Ramawela said. Outside South Africa, Sun no longer owns or operate hotels which she said will affect the hotel presence in places like Zambia and Victoria Island in Nigeria. Anything outside of South Africa, they’ve divested themselves of the hotel component and have sold it to the (Thailand-based) Minor Group.

City Lodge, limited mostly to South Africa, expands model into Africa

City Lodge was mainly a South African chain because its model was to wholly own the land and operate the hotels. Now the model is changing as the group moves out of South Africa, Ramawela told BusinessTravelNews.

City Lodge just opened a hotel in Botswana and has 100-percent ownership of two properties in Kenya. They’re expanding into Ethiopia, Mozambique, Botswana and Namibia.

Where’s the biggest buzz in Africa for hotel development?

In terms of economic development and hotel development, the buzz is in Rwanda, Angola, Mozambique, Tanzania, Nigeria, Ghana and Ethiopia, Ramawela told BusinessTravelNews. The island of Mauritius is carving a niche for itself as the Cayman Islands of Africa.

Why are Angola hotels so expensive?

As the second-largest oil producer in Africa, Angola’s seeing a lot of activity and interest. There’s not enough infrastructure but there’s money to be made there, Ramawela said. People get frustrated by how slow it is for things to happen and lack of support for international investment. There’s a little protectionism the Angolans are putting into place.

“Angola has almost the same profile as Nigeria,” Ramawela told BusinessTravelNews. “The returns are huge, and you don’t have much supply on the ground, and the Angolans have money. Everybody is clamoring to be in that market.”

Is South Africa’s hotel market saturated?

People in South Africa say the hotel market is saturated, but there are plenty of opportunities, Ramawela told BusinessTravelNews. Cape Town is not just putting an emphasis on the four- and five-star hotels but working on good one-, two- and three-star properties.

The Durban market is reinventing itself, and Tsogo Sun is a major investor in the city. Johannesburg’s focus is on enhancing its position as Africa’s business center, she said. There’s a focus on medical tourism, with people coming to take advantage of the private healthcare facilities.

Focus on secondary South African cities

“The focus there is really extending the facilities and hotel space for the business traveler,” Ramawela told BusinessTravelNews. “They are finally finding when they go to those secondary cities, those cities have been served by smaller accommodations and guesthouses. There are business travelers looking for a hotel experience.”