Hotel chains grow in Africa despite coronavirus pandemic

2020-10-19 21:27:37
Hotel chains grow in Africa despite coronavirus pandemic

Africa’s tourism sector has suffered in the face of the coronavirus pandemic, but the world’s biggest hotel chains remain committed to the continent.

Major hotel chains, from Marriott International to Radisson Hotel Group and Paris-based Accor, Europe’s largest hotel company, say their African businesses are not only holding up, they are determined to stay on track with, if not grow, their footprints.

The companies see sub-Saharan Africa as underserved and underdeveloped in terms of hotels and predict that demand for both business and leisure travel will grow once the pandemic abates.

“I haven’t heard of anybody that says we aren’t interested in Africa anymore,” said Trevor Ward, owner of W Hospitality Group, a Lagos, Nigeria-based advisory firm that works across Africa. “The long-term play is fine.”

Travel restrictions and social-distancing have kept long-haul business and leisure travelers at home, choking a crucial source of revenue for the region.

The World Travel and Tourism Council estimates that in a baseline scenario, Africa will lose 10.9 million, or 44%, of its tourism-sector jobs and $75 billion, or 45%, of its tourism income this year. On a percentage basis, that decline is worse than the Asia-Pacific region and the Americas, though not as bad as Europe.

The collapse of many independent hotels due to Covid-19 has heralded a new phase of consolidation in the lodging industry, where big chains are taking over and rebranding distressed properties, leading to faster expansion across Africa, hotel chains and analysts say.

To be sure, the expansion of hotel chains is just one slice of Africa’s diverse hotel market. Properties outside cities in iconic regions from Zanzibar, Tanzania, to Botswana’s Okavango Delta have also taken a huge hit.

Hilton, a US-based hotel company with branches in 94 countries, called conversions a bright spot for the company.

Andrew McLachlan, managing director of development for sub-Saharan Africa at Hilton, which has 25 operational hotels and 41 hotels under development in the region, said the company’s interest is being sustained partly because the continent’s hospitality sector remains underdeveloped in terms of expected future demand compared with other parts of the world.

“There’s a lot more open space. It’s the last remaining untapped continent as far as hotel brands,” said Patrick Scholes, a managing director of lodging and leisure equity research at Truist Securities in New York.

Another US-based hotel company, Marriott, plans to add more than 30 properties and 5,000 rooms across sub-Saharan Africa by 2025, adding to its current portfolio of more than 100 hotels.

Marriott is the largest hotel chain in the world by number of available rooms.

US-based Radisson Hotels has about 50 hotels in 32 countries in sub-Saharan Africa and plans to open 50 more, including a hotel in Johannesburg and another in Bamako, Mali, before the end of this year, and another six to eight hotels in 2021.

Accor plans to open 34 hotels—to add to its current footprint of 70—in the next 36 months in sub-Saharan Africa, in countries like Ethiopia, Ivory Coast and Rwanda.

Radisson’s hotels in Lagos have spent most of this year running at occupancy levels similar to last year’s, according to Tim Cordon, area vice president for the Middle East and Africa at Radisson.

“Sub-Saharan Africa has been more resilient as a trading destination than Europe,” Mr. Cordon said. “Don’t get me wrong, it’s still awful, but it’s mitigated our losses.”


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