Revealed: what’s fuelling the rapid hotel growth in West Africa
Across Africa, hotel development remains important in most advanced economies
ABIDJAN, Ivory Coast, January 27, 2020/ -- Today, Africa is seen as one of the most promising regions for hotel
developers. Aside from small chains and independents, four global hotel
groups dominate signings and openings on the continent. Over the last
four rolling quarters, as of September 2019, Accor, Hilton, Marriott
International and Radisson Hotel Group have opened 2,800 rooms and
signed deals for 6,600 rooms. Across Africa, hotel development remains
important in most advanced economies, such as Morocco and South Africa;
and projects are multiplying in East Africa, especially in Ethiopia,
Kenya, Tanzania and Uganda. In West Africa, Nigeria is back on the
development scene thanks to emerging regional destinations beyond Abuja
and Lagos. Francophone Africa is also moving fast. The Ministry of
Tourism of Ivory Coast has launched an ambitious national plan for
tourism development, Sublime Cote d’Ivoire, and already announced over
US$1bn investment in the sector. Senegal is the other regional star,
with local programmes such as Diamnadio, Lac Rose near Dakar and Pointe
Sarene. Other countries showing active hotel development include Benin,
Cameroon, Guinea, Niger, and Togo.
Now, in an interview, Philippe Doizelet, Managing Partner, Hotels,
Horwath HTL, West Africa’s leading hospitality consultant, in
conjunction with the Forum de l’Investissement Hôtelier Africain (FIHA), the premier hotel investment conference in Francophone Africa, has
identified four fundamental factors which are fuelling an increasing
flow of investment into the hospitality sector in West Africa. They are, in alphabetical order: Air connectivity, Better economic growth,
Currency and Demographics.
In the past few years, additional flight connections have transformed
travel to and from West Africa, which, in the words of Philippe
Doizelet, Managing Partner, Hotels, Horwath HTL, has been a game
changer. He said: “It used to be that the main hubs for flying between
West African countries were Paris and Casablanca. However, thanks to the rapid growth of Ethiopian Airlines and other carriers, such as
Emirates, Kenya Airways and Turkish, the situation has changed; and new
routes are offered to travellers. For example, it is now possible to fly direct from New York to Abidjan, where the African Development Bank is
located, and to Lomé, where the Central Bank of West African States
(BOAD) is situated… and with increased travel comes increased commerce
and demand for accommodation.” According to the UNWTO, international
tourist arrivals in Africa grew by 7% in 2018, one of the fastest growth rates in the world together with East Asia and the Pacific. The flight
data analyst, ForwardKeys, recently confirmed that trend continuing. In
2019, African aviation experienced 7.5% growth and it is the stand-out
growth market for Q1 2020. As at 1st January, international
outbound bookings were ahead 12.5%, 10.0% to other African countries and ahead 13.5% to the rest of the world. As a destination, Africa is also
set to do well, as bookings from other continents are currently ahead by 12.9%.
The second factor is the superior economic growth of many West African
countries, which are expanding substantially faster than many of the
world’s most advanced economies. According to World Bank data for 2018,
several, such as Benin, Burkina Faso, Gambia, Ghana, Guinea, Ivory Coast and Senegal are growing at 6% per annum or better, more than double the world average, 3%. That is a potent attraction to international
investors. However, that’s not all; as prosperity grows domestically, so too does the local financial services industry. It then looks to invest client monies; and a good proportion of that capital gravitates towards real estate projects and, in turn, new domestic infrastructure. As
those projects come to fruition, more prosperity is generated and so a
virtuous cycle is stimulated, which acts as a catalyst for further
economic development.
Currency is the third factor. Later this year, the CFA franc, which is
pegged to the euro, is planned to be dropped and 15 countries in West
Africa (ECOWAS) will adopt the Eco, a new, free-floating, common
currency, designed to reduce the cost of doing business between them and so increase trade. However, whilst there is great enthusiasm for the
Eco, it is somewhat qualified because the economies of participating
countries are at different stages of development and governments may
find it difficult to adhere to agreed guidelines for managing their
economies.
The fourth factor is demographics. The population is young and the
fastest growing of any major world region. According to Philippe
Doizelet, it is also characterised by a hunger to learn and confidence
about the future. “People are seeing their standards of living improve
and they are keen to seize opportunities. We are seeing that mindset
reflected throughout the hospitality industry; it’s incredibly
refreshing and it’s attracting business.” He said.
However, the picture is not all rosy. Horwath HTL also identifies four
factors which threaten economic progress; they are security issues,
political agenda, governance and increasing public debt. Although Africa today experiences much less conflict than it did three or four decades
ago, when most African countries experienced war, some parts of the
Sahel are still subject to security threats. On the political front,
although democracy is continuing to spread, it is not yet the general
rule everywhere, especially when come the times of major elections.
Third is governance. Philippe Doizelet says: “When people are poor and
the state is weak, there will be corruption, but I’m not convinced that
it is much worse than in other parts of the world.” The fourth concern
is rising public debt, much of which has been incurred as long-term
loans from the Chinese to build infrastructure. That said, the debt to
GDP ratio of many West African states is still less than many highly
developed nations.
Matthew Weihs, Managing Director, Bench Events, which organises FIHA,
concluded: “Africa is not the easiest place to do business, but it is an incredibly exciting place because the opportunities substantially
outweigh the threats. Every time we organise a hotel investment forum, I see more hotel openings being announced and I meet new players keen to
enter the market. The FIHA delegates are literally constructing the
future of Africa in front of our eyes and anyone who attends the
conference has the opportunity to join in.” FIHA takes place at the
Sofitel Abidjan Hotel Ivoire in Abidjan, March 23-25.
About Horwath HTL:
Horwath HTL (https://HorwathHTL.com) is the world’s largest and most experienced hospitality consulting
brand, with 45 offices around the globe. Founded in in New York in 1915, it has been providing impartial, specialist advice to its clients for
over 100 years and is recognised as the market leader in all areas of
hotel, tourism and leisure consulting. As the founders and original
authors of the Uniform System of Accounts, the industry standard for
hospitality accounting, Horwath HTL wrote the book on how the industry
measures financial performance in hotels.
About the Forum de l’Investissement Hôtelier Africain (FIHA):
FIHA (www.FIHA-conference.com) is the premier hotel investment conference in Francophone Africa,
attracting many prominent international hotel owners, investors,
financiers, management companies and their advisers. It takes place at
the Sofitel Abidjan Hotel Ivoire on March 23-25. It is organised by
Bench Events which has an established record of delivering high-level
networking and thought leadership conferences for hospitality investment and aviation in Europe, the Middle East, Africa, Asia and Latin
America. ‘Creating an impact’ is the core focus of Bench Events, as the
company enables growth by facilitating deal opportunities. www.BenchEvents.com.
Sponsors of FIHA are: Host Partner: Accor; Host Venue: Sofitel Abidjan
Hotel Ivoire; Gold Sponsors: Amandla Capital, Insignia, Marriott
International and STR; Silver Sponsors: SB Architects and STM
Electromech; Bronze Sponsors: IT Hospitality Futureproof Solutions and
work4stars; Roundtable Sponsor: In Extenso; Research Partner: Horwath
HTL; Exhibitor: Agora.
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