African pension funds are investing in hotel real estate across key countries on the continent according to a business development chief for one of the world's top hotel groups.

In an interview with How we made it in Africa Andrew McLachlan (pictured right), senior vice president of business development for Africa and the Indian Ocean at Carlson Rezidor Hotel Group, said: "In east Africa, west Africa and in the SADC region outside of South Africa, we are actually having discussions right now with pension funds that are looking to acquire existing properties.”

McLachlan says the hotel operator – which owns the brands Radisson Blu and Park Inn and has a presence in 29 countries on the continent – has been talking with pension funds in a handful of African markets that are looking at acquiring hotel properties. These schemes are more interested in purchasing existing hotels that are already up and running, rather than constructing their own from scratch.

“A hotel which is internationally managed tends to be a hotel property that is well looked after with a proven track record from a performance point of view," said McLachlan, a South African, based in Cape Town.

Globally, most international hotel operators don’t own the properties they run, but instead enter into management agreements with the property owner to run the hotel’s day-to-day operations under their brand for a fee. In North America and Europe, these hotel properties are typically owned by real estate investment trusts (REITs) and pension funds.

In Africa these owner classes are not as developed and McLachlan notes they are usually owned by high-net-worth individuals or governments.

But that is changing as increasing numbers of international operators look to secure a slice of the continent.

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