Hilton Hotel Group to Open 13th hotel in Africa in Uganda at the end of 2012.

Global hotel companies have set their sights on what might be the last frontier for the hotel sector: Africa.

Jalil Mekouar, managing director for the Middle East and Africa with Jones Lang LaSalle Hotels, said the continent provides a wealth of opportunities for the industry, especially as the middle class grows. Development is picking up, sources said.

Hotels are taking advantage. Currently, there are 47 properties comprising more than 10,000 rooms under construction in Africa at the end of March, according to STR Global, sister company of HotelNewsNow.com. The continent has an existing supply consisting of nearly 2,500 properties representing more than 375,000 rooms.

One country seeing particular focus on the continent is Morocco, which has more than 1,500 hotels today, Mekouar said. The Kingdom of Morocco plans to again double its hotel sector by 2020.

STR Global counts 35 properties in the total active pipeline, comprising 6,739 rooms.

Further illustrating the growth, the Moroccan hotel industry nearly doubled in size between 2001 and 2010, Maggie Hund, a spokeswoman for Morocco’s tourism association, said via email. The industry counted approximately 97,000 rooms in 2001 and that increased to 180,000 rooms in 2010, she said.

Hilton Worldwide, for one, has a dozen hotels in nine African nations under its umbrella. Hilton has six hotels in its African development pipeline, Jan Van der Putten, VP operations, Africa and Indian Ocean, said in a statement. During the next two years, the company expects to open more than 1,300 rooms.
Hilton is planning to open its 13th hotel in Africa in Uganda at the end of 2012.

“We see tangible opportunities in new markets such as Chad and Sierra Leone as well as Angola, Zambia and Mozambique,” Van der Putten said. “Nigeria, where Hilton has enjoyed a presence for 25 years, continues to prove attractive, and we have plans to open a further two properties in the country within the next two years. Ultimately, Hilton Worldwide’s long-term ambition is to have a hotel in every key city in Africa.”

Demand drivers
African hotels had an up-and-down March, according to STR Global. Kenya, cited by sources as being one prime area for development, saw occupancy fall during March by 11% to 62.3%. Revenue per available room in the nation was down 6.6% to $97.19, but average daily rate grew by 5% to $155.90.

Meantime Egypt saw an 86.4% spike in RevPAR to $33.56 as the country continues to battle back from the downturn caused by the Arab Spring uprising. Occupancy in Egypt is up 90.9% to 46.9%. The country’s ADR is down 2.3% to $71.50.

The 93-room Sea Cliff Hotel in Dar es Salaam, Tanzania, is noting strong occupancy levels, as well, Michelle Hawkins, sales and marketing manager, said in an email. She added the hotel sector overall in Dar es Salaam has seen good performance during the past couple of years.

She said the global recession seems to be driving business to growth markets such as Africa.


“The key driver for this growth is the volume of business travel coming through the city,” she said. “Not only has Tanzania received increased focus and support from the not-for-profit sector, but it has also seen a big investment from the commercial sector, especially within oil, gas and minerals. As a spin off, there is also growth in visiting friends and relations due to a growing expat community.”
Van der Putten said corporate travel also is helping boost the company’s performance in Africa. Airlines are adding routes to Africa, which has helped increase the number of business travelers to African countries, which is leading to more international arrivals.

Security challenges
While there has been growth, sources said there are obstacles in operating in Africa. One of the biggest challenges facing hoteliers in Africa is a perception of a lack of security and political instability.

“The overall (security) perception hurts Northern Africa,” JLLH’s Mekouar said. “In sub-Saharan Africa, there are opportunities, but there is political insecurity.”

Without citing specific security measures, Van der Putten said the company is confident it has the “scope and wider expertise to address any possible concerns.”

The Sea Cliff’s Hawkins also is concerned about infrastructure investment.

“Our biggest challenge will be to grow numbers whilst also developing infrastructure and services to support this growth,” she said. “At the moment, we are very much behind the rest of the world with infrastructure and services, but herein also lies the biggest opportunity.”

Despite the challenges, sources remain optimistic about the future of Africa’s hotel sector.

“If you look at the raw data, it’s 1 billion people, 1,000 languages, (a lot of) natural resources,” he said. “There’s absolutely amazing potential for growth.”

By Shawn A. Turner
HotelNewsNow
25-April-2012