Big brand hotels target African expansion
Five global hospitality brands have announced plans to venture into the African market or to increase their presence on the continent – and more will follow, according to a report on www.nation.co.ke.
This year’s big hitters are Hyatt Hotels and Resorts, Hilton Worldwide, Pearl of Africa Hotel, Dubai-based luxury resort company One&Only, and America’s luxury chain Marriot.
In the run up to the Africa Hotel Investment Forum, held in the Rwandan capital Kigali, Hyatt Hotels Corporation announced plans to open six new hotels in Africa by 2020.
America’s Marriot International is is moving into Kampala, Kigali, Nairobi and Zanzibar. The firm is constructing the $98.9 million (Sh10.1 billion) JW Marriot Hotel next to Villa Rosa Kempinski in Nairobi’s Westlands to be hosted in a building owned by Aviation Industry Corporation of China (Avic) International Real Estate. The complex will comprise an office block, a hotel tower and four apartment blocks.
And on October 1, the Pearl of Africa Hotel, already operating in South Africa, officially launched opened in the Ugandan capital, Kampala.
Fifteen high-end hotels have opened in Kenya since 2013, with about half of them beginning operations in 2016. Most of them are in Nairobi and have added 1,700 rooms to the market.
Mr Peter Penev, Hyatt’s vice-president for real estate and development, says: “With the introduction of a pan-African, visa-free passport next year alongside the continued improvement in the connectivity and growth of the region’s airlines, we expect tourists and business travel will only continue to increase. We look forward to working with our local developers and partners to further deliver on our plan to help grow the industry in East Africa.”
He says his focus on East Africa stems from the governments’ continued investment in infrastructure, an expanding middle class and a growing international recognition of the region’s stability, all contributing to an 11 per cent growth in sub-Saharan African tourism in the past year alone.
“When we first came to Nairobi about four years ago, there was a lot of research done on what would be a good location to expand our markets. From a statistical point of view, we know that nine out of the 20 fastest growing economies are based in sub-Saharan Africa. If you narrow down to East Africa, this is a more stable market. The economy is more diversified and there is deeper credit ratio among the countries in East Africa,” says Tejas Shah, Hyatt’s sub-Saharan vice-president for acquisition and development.
The Kenya recorded a 16.7 per cent increase in international arrivals in 2016 to hit 877,602 visitors. In addition, there has been an increase in domestic tourism that has played a major role in boosting local tourism, thereby putting the hospitality industry on the rise again. For instance, domestic travel grew by 14.6 per cent in 2016 to beat the 3 per cent target set by the Kenya Tourism Board (KTB) in 2015. Kenya National Bureau of Statistics data indicate that Kenyans took 3.6 million bed nights in 2016 compared with 3.1 million in 2015, says the www.nation.co.ke report.
Reports also indicate an increase in intra-African travel. According to the United Nations Conference on Trade and Development (UNCTAD), four out of 10 international tourists in Africa originate from within the continent (from 34.4 per cent in 2010 to 40.3 per cent in 2013). However, this share is still below the global average. Globally, about four out of five international tourists originate from the same region, suggesting that in Africa, this percentage is likely to increase.
Speaking to different seasoned investors in the hospitality industry, one of the biggest takeaways is that hospitality industry is currently looking up and for local investors in search of long-term investment opportunities this would be a good time to move in.