Current Pandemic an Opportunity for African Hotel Management Company Selection & Negotiation

HTI Consulting recently launched a new report on hotel operator selection and management contract negotiation in Africa, providing various invaluable insights into the selection process as well as important analysis on contract contents, trends, benchmarks and negotiation techniques for owners in Africa.

“This topic is becoming increasingly more relevant and important as markets start to open up, hotels begin to action their reopening strategies and key decisions are being taken by hotel owners and new investors,” says Wayne Tr oughton, CEO of HTI Consulting and one of Africa’s leading hospitality investment and negotiation experts.

“In this profoundly transformative and unprecedented time for African hotels, we’re also poised to witness significant transformation in terms have how hotels operate and how owner-operator relationships and hotel management contracts are both forged and defined,” he continues. “We are also seeing more interest from operators in signing contracts for conversions of unbranded properties and signing contracts on new developments focused on apart-hotels and economy hotels,” says Troughton.

“Conversions can allow existing owners to plug into a brand’s distribution system and help plot a faster recovery and re-entry into markets. Conversions also enable unbranded properties to benefit from consumer trust engendered by newly developed cleanliness standards and crucial operating protocols, which independent hotels don’t have,” he states .

“The growing interest in apart-hotels centres around less physical contact with guests, as associated with the concept, and also longer stays. Economy and mid-market hotels also usually offer select services and less physical contact points and will likely become increasingly attractive to the business traveller, in particular as travel budgets reduce in order to compensate for losses incurred during the pandemic,” he adds.

“The prolonged and profound impact of COVID-19 on the sector has created an opportunity for hotel owners. Management companies have been eager to negotiate and sign management contracts for new developments and for the rebranding of independent properties. In order to secure short term and long-term sustainable cash flows for their business, operators have also generally been more flexible. This, coupled with their lack of ability to travel, has meant they have time to focus on the negotiation process, which can now be handled virtu ally,” says Troughton. “This has resulted in shorter negotiation times as management companies essentially have more time on their hands and are incentivized and focused on concluding deals quickly in order to increase the asset value of their hard-hit corporations and share prices,” he comments.

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