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A recent study by Lagos-based consultancy W Hospitality Group revealed what amounted to a frenzy of hotel development in Sub-Saharan Africa when it reported that the number of pipeline rooms had increased by a massive 42%.
The report further revealed that nearly all the major international brands were involved, with the likes of Accor, Radisson, Hilton, InterContinental, Onomo, Movenpick, Marriott and Kempinski blazing the trail.
| Hotel Development in Africa 2012 | |||||||
| Top 10 Brands by Number of Planned Hotels and Rooms | |||||||
| Rank by Hotels | Rank by Rooms | Change | |||||
| on 2011 | |||||||
| 1 | Ibis | 19 | 1 | Radisson Blu | 3.759 | 13.0% | |
| 2 | Radisson Blu | 15 | 2 | Hilton | 3.206 | 14.2% | |
| 3 | Onomo | 13 | 3 | Ibis | 2.632 | -23.6% | |
| 4 | Mövenpick | 12 | 4 | Mövenpick | 2.182 | 6.3% | |
| 4 | Novotel | 12 | 5 | Novotel | 2.037 | 4.2% | |
| 6 | Hilton | 9 | 6 | InterContinental | 2.01 | 31.2% | |
| 6 | Park Inn | 9 | 7 | Onomo | 1.579 | – | |
| 8 | Azalai | 7 | 8 | Park Inn | 1.498 | 56.2% | |
| 9 | InterContinental | 6 | 9 | Kempinski | 1.371 | 37.1% | |
| 9 | Kempinski | 6 | 10 | Marriott | 1.25 | 46.9% | |
One does not normally think of Africa as a place where the streets are paved with gold so why is this rush happening?
Trevor Ward, Managing Director of W Hospitality Group, which carried out the research says: “7 of the world’s 10 fastest growing economies are in Africa, where economic growth is around 6% per annum; that’s more than double the rate of many major Western economies and faster than the average for Asia – so if you are answerable to shareholders for growing returns, these are facts you can’t afford to ignore.”
An analysis of leading economic and demographic trends sheds more light on the phenomenon. African economies have become much healthier. In the 1990s, average inflation was running at over 20%; by the 2000s, it had fallen to less than 10%. Over the same period, debt as a percentage of GDP fell from over 80% to less than 60% and national budget deficits had diminished by over 60%.
Autocracy has been replaced by democracy. In the early 1980s over 30 countries were ruled by autocrats and there were few democracies; by the late 1990s, that statistic was reversed.
Armed conflict, which used to be prevalent across the continent, has virtually ceased. In the ‘70s many African countries suffered from fighting; today fewer than a handful are affected.
Infant mortality has almost halved in the past 50 years; life expectancy has increased by over 25% and now a third of the population have mobile phones.
Perhaps most significantly of all, investors in Africa are having a positive experience. In the period 1999 – 2009, the S&P 500 fell by 0.8% year on year; by comparison, the S&P Africa grew by over 23%.
Jonathan Worsley, Chairman, Bench Events, which organises AHIF, the premier hotel investment conference in Africa, concludes: “The smart money doesn’t just spot opportunity; it creates it. If you compare Africa, and particularly Sub Saharan Africa, with the rest of the world, there is a dramatic shortage of international branded hotels so I expect the rapid growth in hotel development to continue apace for several years yet. What is more intriguing is who will be getting in to bed with whom and on what terms? Whilst it’s not overtly stated, that’s what September’s conference is really all about.”
The Africa Hotel Investment Forum (AHIF) will take place in Nairobi on September 25-26. It is the premier hotel investment conference on that continent and it will be attended by leaders of the hospitality industry, by investors, by consultants and by the media from Africa and around the world.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
