As Marriott International completes its acquisition of Protea Hospitality Group in Africa, STR Global and W Hospitality Group report an increase in hotel development in Sub Saharan Africa, with Middle Eastern hoteliers looking to cement their presence
On April 1 2014, Marriott International became the largest hotel company in Africa having completed the US $186 million acquisition of the 116-hotel Protea Hospitality Group, based in South Africa.
The deal added 10,184 rooms to Marriott’s portfolio and includes Protea’s hotel management company and its three hotel brands. Marriott is set to manage 45% of the rooms, franchise around 39% and lease roughly 16%.
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With a total of 125 hotels across the African continent, 116 of which are situated in Sub-Saharan Africa (SSA), the expansion will, according to Alex Kyriakidis, president and managing director of Marriott International Middle East and Africa “enable Marriott International to cater to the region’s booming economies in addition to supporting and creating job opportunities for local residents.”
According to STR Global, hotel development in Sub-Saharan Africa is ramping up, with the pipeline increasing by 23% in 2013, compared to a 9% growth in North Africa. Considering growth in Asia Pacific was less at 8.6%, and bearing in mind forecasts from the International Monetary Fund (IMF) that economic growth will be higher in Africa than Asia over the next five years, for hotel chains established in the Middle East looking to expand, heading west holds significant opportunities.
But while Marriott’s expansion has brought the demand for global brands in Africa into the spotlight, it has also raised the question of how companies can best achieve significant growth in such a fragmented market. The first step, according to Lagos-based W Hospitality Group MD Trevor J Ward, is setting up a development office.
Ward commented: “Historically focused on North Africa, chains had been opportunistic in terms of development in Sub-Saharan Africa, responding to opportunities solely; however, in the last 10 years, several chains have established development offices in Sub-Saharan Africa, starting with Carlson Rezidor, and followed by Accor, Hilton, Starwood and Marriott.”
W Hospitality calculated that the number of branded hotel rooms planned for SSA has risen consistently since 2011 from 13,700 in 2011 to 23,283 rooms in 2014 and the number of hotel deals signed has also increased sharply, from 77 hotels in 2010 to 142 hotels in 2014.
This represents growth of 84% over the five-year period, and a compound annual growth rate of 13%.
The report calculated that the 29 hotel chains in its survey currently have almost 90,000 rooms operating in Africa, with around 48,000 in North Africa’s five countries and 41,000 in sub-Saharan Africa, which has 49 countries.
The imbalance can be explained by the amount of tourism development that has taken place in North Africa, however, the figures show that pace of new development is now faster in Sub-Saharan Africa than it is in North Africa.
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