In sub-Saharan Africa, the casino industry is biggest in South Africa, where gaming giants such as Tsogo Sun, Peermont and Sun International dominate the land-based industry.  All three companies have casinos located in hotels that they manage, as well as stand-alone operations.  Elsewhere, Kenya has a reasonably large gaming industry, although most operations are quite small, and none rival what is on offer in Sun City and MonteCasino.

Look at the figures for per capita GDP, and it is no wonder that South Africa has the largest industry – at US$10,280, the per capita GDP in South Africa is almost five times the average for sub-Saharan Africa at US$2,108 (both figures at 2010 purchasing power parity, World Bank July 2011).

Whilst most casinos in Kenya cater primarily to the tourist trade, the bedrock of profitability in most operations is the local population, including resident expatriates.  So casinos in capital cities, from Abuja to Monrovia, can attract the higher-earning population there, and the diplomatic community.  Go into most casinos in Nigeria, for example, and the majority of players appear to be either Chinese or Lebanese, both nationalities known for their love of gaming.

The gaming industry is a difficult one to succeed in.  It is rarely praised, and often vilified.  Governments mostly love the industry, because it is such an easy target for taxation.  Local communities blame the industry for fomenting social ills, not only problem gambling (which the serious players in the industry take seriously, as being as much their problem as the individual’s), but also those such as corruption, crime and prostitution, seeing casinos as only for the rich and powerful, an alien presence owned by a foreign company, employing foreigners in all the top jobs, and so on.  It is not for them, so it must be wrong.  Religious organisations often support this antipathy – but it is noteworthy that Islam and Egypt, a country with the second largest number of casinos on the continent of Africa, live amicably side by side.

But casinos are a legitimate part of the hospitality business, and can be an extremely useful component of a mixed-use development.  Look at MonteCasino in Gauteng as an example; named not after the gaming content but after an Italian village, and themed as such, it is a superb mix of gaming, retail, entertainment, lodging and other facilities, a destination in its own right in which the casino is a relatively small, but essential, part.

Even if you are not a player, the presence of a casino, the noise, the lights, the ambience, still gets the adrenaline going.

But casinos are volatile businesses, and here’s a fact – the house does not always win!  Casinos can make a loss.  The economic environment will directly affect the propensity of the locals to gamble, and Tsogo Sun has recently announced a 4 per cent drop in profits due to a decline in leisure spending, and Sun International reported like-for-like growth in revenues of only 3 per cent in early 2011.  Not only is the impact from a negative economic environment, however – local and international political factors can have an impact.  A change of government can bring about new legislation, new taxation, or even an outright ban on gambling (which just forces it underground). And a deterioration in relations with foreign countries can close off cross-border traffic overnight.  Or (and lets face it, this is what it is all about!), the players can win, and the house can lose!

Casinos are not a licence to print money, but well and responsibly managed they are a profitable business, and fit well alongside a hotel, and especially within a mixed-use development.  Like any other business, they need careful planning, especially a close examination of the market – some communities have a higher propensity to gamble than others, and just because there are some big-time players in the country, doesn’t necessarily mean that they want to (be seen to) play in their home town.  Casinos are not a proverbial “licence to print money”, but they can be profitable businesses – and don’t underestimate the need to continuously reinvest in the equipment, especially the slot machines – tired old one-arm bandits will not attract the “right crowd”.

Operating costs of a casino are high – an operational margin of 10 per cent of the house revenue (i.e. after paying out winnings) is not uncommon.  A modern casino has high tech security equipment, sometimes with a 24-hour dedicated link to an offshore control centre, a large number of security, surveillance, gaming and catering personnel, and the need for an uninterrupted power supply, a major challenge in some places in Africa.  And then there is the investment required in responsible gaming programmes, and within the host community to overcome or at least mitigate negative attitudes.

Interestingly, Tsogo Sun and Sun International are two of the biggest investors in hotels outside of their home country – the former own hotels in Lusaka, Maputo and Dar es Salam, all branded Southern Sun, and it s a moot point whether the completion of the renovation of the Federal Palace Hotel in Lagos, and the creation of Nigeria’s largest casino there, would have been completed in 2008 without an investment from Sun International.

From their point of view, they would never assume that a casino will subsidise an otherwise-marginal investment in a hotel.  Whilst casinos are attractive to the leisure and

conference markets, they are not the main pull factor – the location has still got to be the right one.  And if the hotel cannot attract enough business in its own right to be sustainable, then the business model is flawed from the outset.

Casinos are exciting, glamorous and profitable – but they are not for the faint-hearted, and definitely not for the amateur!

Trevor Ward

W Hospitality Group, Lagos

We watched the revolutions on television.  Night after night we were shown pictures of riots in the centre of Cairo and Tunis, and we joined the revolutions in our sitting rooms, willing the demonstrators to succeed.  And we reached for the telephone and cancelled our holiday plans, withdrawing our economic support for the same countries that need just that support to recover from the damage.

We looked on as it spread to Libya, with much more than demonstrations and peaceful transitions – the formerly untouchable Gadaafi challenged the rebels, and they responded with a full blown war, still continuing in October 2011.  And the hotel industry in Tripoli was the centre of attention, as journalists were detained in the now-famous Rixos hotel.  The Corinthia also bravely stayed open.

Unlike the JW Marriott, the Four Points by Sheraton and the Radisson Blu, which had only just opened their doors, only to have to shut again within days.  It was unsafe for the staff and guests to remain, and anyway, apart from journalists, there were no guests.

Algeria and Morocco have been largely untouched by the “Arab Spring”, so far at least, and Morocco has grand plans to increase the share of national GDP contributed by tourism.

How quickly the world changes!  At the beginning of the year, the international hotel chains were focusing heavily on North Africa, opening hotels throughout the region, and with considerable pipelines of new deals:

Hotel Development in Africa 2011

Top 10 Countries by Number of Rooms

Hotels Rooms
1 Egypt 19 5,967
2 Morocco 30 5,297
3 Nigeria 23 4,811
4 Algeria 14 2,575
5 Libya 6 1,937
6 Ghana 7 1,346
7 South Africa 8 1,009
8 Tunisia 4 762
9 Equatorial Guinea 4 661
10 Ethiopia 3 482
Source: W Hospitality Group research, March 2011

All five of the North African countries featured in the top ten destinations for branded hotel developments, and four of them in the top five – driven either by the then-booming tourism industries in the likes of Morocco, Tunisia and Egypt, or by the opening up of the oil-based economies in Algeria and Libya.  Accor, the Paris-based hotel chain operating hotels under the Pullman Sofitel, Ibis and Novotel brands, amongst others, had over half of their development pipeline in Morocco and Algeria, underlining their commitment to North Africa.

Egypt topped the list, and understandably work on the majority of these 19 projects has stopped, due to the uncertainty about the future politics in the country, and the general effect of the global financial crisis.  But Egypt has proved several times in the past that it is a fighter, and has rebounded many times after terrorist attacks and the like.  The rebound this time may take longer, with riots in Cairo in October and uncertainty about the upcoming elections, but tourists have short memories, and resorts like Sharm el Sheikh and Hurghada can benefit from their strong individual identities, as opposed to being solely connected with the country’s tarnished reputation.

Libya’s future is unknown, but what is certain is that the country will require a great deal of support going forward, and the rebuilding of the cities will generate hotel demand.  Whether that will bring new deals to the country remains to be seen.

Tunisia has had the most peaceful political transition and, given the importance of tourism to the country’s income, the tourists are likely to return to the resorts in 2012, with full recovery by 2013.  that’s badly needed, with tourist numbers down 50 per cent in the peak summer season.

The crisis in North Africa affected not only the five countries of the region, but also countries regarded as “too close” – Sicily and other islands of Italy including Lampedusa and, strangely enough, also Malta.  The latter is recovering well from the initial downturn, and the tourist authorities in Sicily and other islands are hoping that tourists really do have short memories, even if their knowledge of geography remains a bit suspect!  But, as usual, every cloud has a silver lining, and North Africa’s loss is Southern Europe’s gain – Spain, Portugal, Greece and Turkey all reported unexpected increases in tourism numbers and revenues, at time when at least the first three countries badly need it.  According to press reports, Spain received almost 8 million tourists in August alone, hotel receipts in Portugal were up 12.5 per cent in July, Turkey is up around 20 per cent in the first half of the year, and Greece is up 14 per cent.

And finally, another knock-on effect of the Libyan crisis is being watched carefully by operators and investors – at the last count, the Libyan government owns and manages around a dozen hotels in Africa, through its Laico Hotels vehicle, owns at least two more hotels which are closed awaiting refurbishment, and is the owner of others managed by third parties, including the Radisson Blu in Sandton.  Some would say, probably correctly, that Libya is the largest hotel investor in the continent.  Will the new government wish to remain the holder of that title? Or will they start to divest, placing some superb assets, such as the Regency in Nairobi and the Okoume Palace in Libreville on the market?  We can only wait and see.

Trevor Ward

W Hospitality Group, Lagos

Announcing a new hotel opening in Chad recently, Hilton stated that their ambition is to have a hotel in “every major city in Africa”.  This is an advance on a previous announcement that they wanted to be in every capital city (54, at the latest count!), and is a recognition that there are many opportunities “off the beaten track”.

Take Nigeria, for example.  The country is a federation of 36 States plus the Federal Capital Territory (FCT), so really 37 in all.  Each State has a capital city, plus Abuja in the FCT.  The Big Three are Lagos, the commercial capital of the country and the official capital of Lagos State, Abuja the business capital, and Port Harcourt (Rivers State) the main centre of the oil and gas industry.  All three now have internationally-branded hotels, including a massive Hilton in Abuja (670 rooms and suites), and Starwood and Protea have a presence in all three.

As well as these capital cities, there are some important urban centres such as Warri and Eket, both oil towns, which warrant attention.

So far, only Protea and African Sun have ventured outside of the Big Three, the former with a recently-opened hotel in Warri, and African Sun operating hotels in Enugu and Benin City.  More are coming, there’s a Park Inn under construction in Abeokuta, a Protea opening shortly in Benin City, and I am working with several State governments to get professional management and brands into hotels which they own.

But, as usual, Nigeria is different from other countries!  Outside of South Africa, it is the only country in sub-Saharan Africa to have so many major cities (something in the order of 45 to 50, by my reckoning), and therefore so many opportunities for development.  And South Africa is already pretty well developed, and therefore with fewer opportunities currently, especially given the building boom that was triggered by the FIFA World Cup.  Angola is, probably, the next most attractive country, with 18 Provinces, each with a capital city, and a few other cities such as Soyo in the north, where massive investment is taking place in the LNG sector.  MITC, a Luanda-based developer. is working on a roll-out programme of mid-market, branded hotels in many of the Provinces, with international management engaged to operate and brand them.

At the other end of the scale, there are several small countries which have few (if any) major cities outside of the capital – Benin, Togo, Guinea Bissau, for example.  No wonder the major chains are focusing much of their efforts on Nigeria and Angola.

Not all “secondary” cities are suitable for hotel development, though.  Prerequisites are a growing economy (or a significant tourism potential), good air and road access, and an environment conducive to private sector investment and operations.  The trouble is, information about many of these locations is sparse, to say the least.  Whilst that may be an indicator in itself that there is little opportunity, I don’t believe that is necessarily a forgone conclusion every time.  I am a firm believer that a modern, well-managed, well-presented and well-located hotel product can create demand – if you build it they will come.  Obviously, the risk is higher, relying more on gut instinct than empirical evidence, but there are several examples of where this works – take Starwood’s Le Meridien Hotel in Uyo, Akwa Ibom State in eastern Nigeria, for example, where virtually all the demand is created, attracted by the beautiful setting, the top-class golf course and the conferencing facilities there.  But there is a fine line between successes like that, and white elephants driven by ego – the huge hotels built by government because the neighbouring state built one, and they think they must have one too.

My studies in secondary cities, especially in Nigeria and Angola, using adapted Lodging Market Penetration tools, reveal that the main opportunities are for mid-market hotels, typically with a maximum of 100 to 120 rooms, which can cater to three main markets, i.e. business visitors during the week, residential conferences, and weekend leisure traffic – there are several cities in Nigeria which have “reverse seasonality”, enjoying their highest occupancies and average daily rates at weekends when indigenes return home to party.  But however high the demand, I have found that there is always a cap on what people are prepared to pay for hotel accommodation – you just cannot charge as much in Soyo or Sokoto as you can in Luanda or Lagos.  The costing of the hotel therefore needs to be very carefully controlled, to ensure that returns are acceptable.

I think it will be some time before we see Hiltons at every turn – but then Africa never ceases to surprise us!

Trevor Ward

W Hospitality Group, Lagos


We Provide a Complete Range of Services to Investors in the Hotel, Tourism and Leisure Industries.

We specialise in the provision of advisory services to the hotel, tourism and leisure industries, providing a full range of services to our clients who have investments in the sector, or who are looking to enter them through development, acquisition or other means.In sub-Saharan Africa we are regarded as the market leader due to the market and financial expertise of our staff (all of whom have worked in the industries they now consult to), our worldwide knowledge, and our commitment to our clients.

Our team has experience of more than 80 countries worldwide including 30 in Africa, both developed and developing, and at all market levels, from deluxe hotels to roadside lodges, exclusive health clubs to public recreation facilities, and from the master planning of thousand hectare sites to the best use of city blocks.

Our clients include most of the major international hotel companies, as well as multilateral funding agencies, financial institutions and governments, national and international corporations and individual entrepreneurs.

Read more

[google-map-v3 width="480" height="470" zoom="15" maptype="roadmap" mapalign="right" directionhint="false" language="default" poweredby="false" maptypecontrol="false" pancontrol="false" zoomcontrol="false" scalecontrol="false" streetviewcontrol="false" scrollwheelcontrol="false" draggable="false" tiltfourtyfive="false" addmarkermashupbubble="false" addmarkermashupbubble="false" addmarkerlist="Angola{}5-default.png{}Angola|Benin{}5-default.png{}Benin|Cameroon{}5-default.png{}Cameroon|South Africa{}5-default.png{}South Africa|Nigeria{}5-default.png{}Nigeria|Kenya{}5-default.png{}Kenya|Central African Republic{}5-default.png{}Central African Republic|Chad, Chad{}5-default.png{}Chad|Democratic Republic of Congo{}5-default.png{}Democratic Republic of Congo|Cote dIvoire{}5-default.png{}Cote dIvoire|Burundi{}5-default.png{}Burundi|Equatorial Guinea{}5-default.png{}Equatorial Guinea|Ethiopia{}5-default.png{}Ethiopia|Egypt{}5-default.png{}Egypt|Gabon{}5-default.png{}Gabon|Ghana{}5-default.png{}Ghana|Guinea{}5-default.png{}Guinea|Liberia{}5-default.png{}Liberia|Libya{}5-default.png{}Libya|Malawi{}5-default.png{}Malawi|Morocco{}5-default.png{}Morocco|Namibia{}5-default.png{}Namibia|Senegal{}5-default.png{}Senegal|Sierra Leone{}5-default.png{}Sierra Leone|Sudan{}5-default.png{}Sudan|Tanzania{}5-default.png{}Tanzania|Zanzibar{}5-default.png{}Zanzibar|Zambia{}5-default.png{}Zambia|Zimbabwe{}5-default.png{}Zimbabwe|Togo{}5-default.png{}Togo|NDjamena, Chad{}5-default.png{}NDjamena, Chad" bubbleautopan="false" showbike="false" showtraffic="false" showpanoramio="false" addmarkermashupbubble="false" addmarkermashupbubble="false"]

[wp-visited-countries] [/wp-visited-countries]

If you look at the world map, with all the little lights representing an international hotel chain property, Africa is still “The Dark Continent”.  There are a couple of exceptions, of course, namely Egypt and South Africa, but even in the latter there are not many, and of late the number has reduced with rebranding if several hotels from international to “home-grown” brands.

One of the mainstays of the hotel industry in Africa is hosting conferences and other events. The experts once said that video conferencing and other technology spelt the death of the meetings industry – everything would be virtual! Wrong again – a survey by the International Congress and Convention Association (ICCA) of a specific segment of the market, international associations, shows that, whilst Africa only had a 3.8 per cent share of the worldwide associations meeting market in 2009 (314 events out of a total of 3,800 global events), this is more than double the number of events it hosted in the previous record year of 2005 when there 163 meetings across the continent.

South Africa is the most established international meetings destination in Africa.  It has seen significant growth in the number of events from the international association sector in recent years.  In 2009 some 90 international events were held in the country, up from 71 in 2000, and is ranked the 34th highest country worldwide with a 1 per cent share of the market.  This must, in part, be because of the development of major events facilities throughout the country

In Johannesburg there are three large venues: The Sandton Convention Centre, The Expo Centre and the Coca Cola Dome.  Durban’s International Convention Centre opened in the mid 1990s and the World Travel Awards named it ‘Africa’s Leading Conference Centre’ in 2010.  The Cape Town International Convention Centre (CTICC) opened in 2003 and is one of a number of conference venues in the city.  And the East London International Convention Centre opened in early 2010.

Egypt was, in 2009, the second most popular African country, ranked 48th with 32 events.  Morocco has seen significant growth in recent years, largely due to new facilities being developed in the country.  The ranking of other countries varies from year to year.  Nigeria posted a strong performance in 2009 with 15 events, up from just five the previous year.  In other West African countries Ghana and Senegal both hosted 12 events in 2009, an improvement on previous years.  In East Africa, Kenya and Tanzania are the most successful locations for international events.  Cape Town is the most popular city in Africa for international association events, hosting more than double Cairo’s 21 events in 2009.  Marrakech has been growing slowly and is now in third place.  Johannesburg is also popular and in 2009 Abuja, Dakar and Accra also hosted more events than in previous years.

Table 1 details the number of international association events held in African cities over recent years.

Table 1 -Location of African International Meetings by City
  2007 2008 2009
Cape Town 43 42 49
Cairo 17 16 21
Marrakech 12 12 16
Nairobi 10 n/a 14
Johannesburg 13 13 13
Source: ICCA

Many of the large convention centres in Africa were built to host a specific high profile government event, such as the African Union annual meeting, which rotates around African capitals.  Some centres have been built as ‘gifts’ from other nations, particularly China.  Whilst these venues offer competition in the scale of facilities that they offer they are never commercially-inspired, nor market-led, which means that the facilities frequently do not meet the specific requirements of the meetings market, and their effectiveness is diminished.

Many large convention centres worldwide, including in Africa, are operated and developed by governments.  The aim is to attract business travellers to a city and to enjoy the economic benefits that accrue.  In addition the existence of a world class convention centre, and the increased visitation that results, can bring considerable PR value to a city.

Table 2 details of some of the leading convention centres in Africa, along with a summary of their facilities:

Table 2 - Major Convention Centres and Large Conference Venues in Africa
Venue City Largest Room Theatre Style 2nd Largest Room Theatre Style Total Other Conference Rooms Total Conference/Exhibition Space m2 Bedrooms on Site
West Africa  
International Convention Centre Accra 1,600 200 3 n/a Kempinski project
Le Méridien President Hotel Dakar 648 200 60+ 2,000 378
Palais De Congrès Cotonou 1,200 300 4 n/a 305
Grand Theatre Project Dakar 1,800 n/a n/a n/a n/a
South Africa  
Sandton Convention Centre Johannesburg 4,500 4,100 13 22,000 1,000
International Convention Centre (ICC) Durban 5,200 2,250 40+ 51,000 inc exhibition centre 327
International Convention Centre (CTICC) Cape Town 2,400 2,200 33 11,400 483
East London International Conference Centre Eastern Cape 1,400 600 5 3,920 261
North Africa  
Intl. Convention Centre Cairo 2,500 800 11 58,000 close
Palmeraie Golf Palace Marrakech 1,500 500 23 4,000 700
Mazagan Beach Resort El Jadida, Morocco 1,300 270 6 2,000 500
East Africa
United Nations Conference Centre (UNCC-AA) Addis Ababa 850 650 24 5,700
Arusha International Convention Centre (AICC) Arusha 1,350 200 12 5,000
Kenyatta International Conference Centre (KICC) Nairobi 4,000 800 6 7,196
Source: W Hospitality Group research

Nigeria has several large conference venues, as shown in Table 3.

Major Convention Centres and Large Conference Venues in Nigeria
Venue City Largest Room* 2nd Largest Room* Number of Other Conf. Rooms Bedrooms on Site
Expo Centre (Eko Hotel) Lagos 5,000 600 16 654
Lagos Civic Centre Lagos 800 200 3 -
MUSON Centre Lagos 1,000 250 3 -
Abuja Intl. Conference Centre Abuja 2,000 600 7 -
ECOWAS Hall Abuja 1,000 500 6 -
Transcorp Hilton Abuja 1,200 300 24 670
Sheraton Abuja Abuja 1,500 - 12 540
Source: W Hospitality Group Research

* Theatre style

Although Nigeria has some of the largest facilities outside of South Africa, the majority of demand at these venues is from the domestic and regional market, rather than from international sources.  This is due to the strong demand from local and regional organisations, and because attracting demand from a greater number of international organisations faces the challenge of the image of the country, and administrative hurdles such as visas.

Dakar is arguably the most established international convention and events destination in West AfricaThis is despite the country having no convention bureau and the tourism authority doing little or nothing to promote to this market.  Following the civil war in Cote d’Ivoire in the early part of this decade, and the more recent unrest there, Abidjan has lost its pre-eminence as West Africa’s preferred meeting point, and Dakar (plus to a lesser extent Accra) has assumed that role.

Dakar is the business, government and NGO centre for Francophone West Africa, and strong demand for conferences and meetings in the city is encouraged by the extensive conference facilities that are located in Dakar, especially the flagship Convention Centre at the Le Méridien President.  Other key success factors are the increasing volume of bedrooms available, good air access, political and economic stability, security, and the strategic location of Dakar in West Africa.

A new entrant to the market will be the 2,600 seat Kigali International Convention Centre being developed by Ultimate Concepts, alongside a five-star hotel with 292 rooms, five office buildings and a museum.  This will be a strong competitor to such facilities in East Africa as the Arusha International Convention Centre (AICC) in northern Tanzania, and

Nairobi’s Kenyatta International Conference Centre.  The AICC hosts an average of 100 meetings a year attracting some 11,000 delegates.  Arusha is a popular location for domestic, regional and international events because of the favourable climate (compared to Dar es Salaam and Nairobi), the availability of good quality conference and hotel facilities, and the exceptional pre- and post-event leisure opportunities available to delegates and accompanying persons, specifically safaris in the Northern Circuit.

Hotel venues in Morocco are also starting to have an impact and have the advantage of a close proximity to Europe and short travel times, in a destination perceived as “exotic”.  However, Moroccan venues are more expensive and offer smaller capacity venues than those in South Africa.  Egypt has been a strong market for conferences and also attracts events from the Middle East as well as Europe.  The recent civil unrest there is likely to reduce Egypt’s success in this market, at least in the short-term.

West Africa is still only a relatively small player in the international meetings market, although various venues have had success in the regional market.  The main exception is

Dakar which has been a favoured conference destination for many years, particularly with Francophone countries.  Dakar has good air connections to Europe and some good quality and professionally managed venues, in particular Le Méridien President Hotel.

In the emerging economies of Africa, there is a greater need than ever for Africans to meet and to share experiences, learn from each other and make plans for the future.  This expert believes that the meetings industry – the real one, not the virtual one - has a very, very bright future.

Trevor Ward

W Hospitality Group, Lagos


Each year the West Africa-based W Hospitality Group carries out a survey of the main hotel brands’ development activities in Africa.  Based on information supplied by the chains themselves, this research tracks signed and confirmed deals for management contracts and other deals (management contracts are by far the majority of agreements signed) in the 53 countries of Africa.  We are aware that many other deals are being discussed (and are privileged to be working on many of them!), and we will include them in future surveys just as soon as the ink is dry.

We estimate that the hotel chains in the survey currently have over 92,000 rooms operating with their brands in Africa, with around 40,000 in North Africa and 52,000 in sub-Saharan Africa.  But when one considers that there are only five countries in North Africa (Morocco, Algeria, Libya, Tunisia and Egypt), the opportunity in the other 48 countries on the continent is obvious.

At the beginning of 2011, the hotel chains reported a total of 156 hotels, with just over 31,000 rooms, in their development pipelines.  This means signed deals, but as we comment later, not necessarily cement being poured!

2011 Hotel Development in Africa

Regional Summary

  2011 2010 2009
  Hotels Rooms Hotels Rooms Hotels Rooms
North Africa 75 17,038 72 16,909 61 15,611
Sub-Saharan Africa 81 14,101 80 15,223 90 15,753
TOTAL 156 31,139 152 32,132 151 31,364

Compared to the contractions in pipelines in other parts of the world, particularly Europe and the USA, the pipeline has been quite stable for the past three years.  And note, of course, that a reduction in the numbers is not wholly a bad thing – the objective is to get new hotels open and making money, and that has been happening, with several new openings in North Africa, South Africa and Nigeria.

North Africa still dominates the development effort, especially in the hotspots of Morocco and Egypt.  This research data was, however, collected before the turmoil hit the region, particularly in Libya, and we know that there will be delays and cancelled projects.  Two hotels in last year’s pipeline, the JW Marriott and the Four Points by Sheraton, had opened in Tripoli, Libya – and promptly closed again when the conflict erupted there.  And work has

been suspended on many projects in Egypt, pending the elections to be held there later this year

The top brands by number of hotels and rooms in their pipelines are as follows:

Hotel Development in Africa 2011

Top 10 Brands by Number of Planned Hotels and Rooms

Rank by Hotels Rank by Rooms
1 Radisson Blu 16 1 Radisson Blu 3,327
2 Ibis 14 2 Hilton 2,807
3 Novotel 11 3 Ibis 2,150
4 Hilton 10 4 Mövenpick 2,053
5 Etap 9 5 Novotel 1,955
6 Park Inn 7 6 Holiday Inn 1,900
7= Holiday Inn 6 7 InterContinental 1,532
7= Lonrho 6 8 Etap 1,294
7= Mövenpick 6 9 Kempinski 1,000
10 Sofitel 5 10 Le Meridien 965

This analysis tracks only branded hotels, and therefore does not capture all hotel projects in Africa.  But it probably captures the majority – in Lagos, two thirds of the new supply under construction is branded, so one can surmise that at least that proportion of the new hotel pipeline is included.  And in many smaller cities around the continent, the branded hotel under construction is the only serious game in town.

Some companies, like African Sun and Southern Sun, operate with multiple brands, some owned by them (Southern Sun have Stay Easy and Garden Court for example) and others as franchisees (both companies operate hotels under franchise from IHG), as well as managing unbranded hotels, but only those new deals that are confirmed by the brand owner are included.

There are some interesting movements in the rankings when one moves from a consideration of hotels to one of rooms.  Whilst the more hotels the merrier, the economic unit on which profits are made is the letting unit.  Hilton have fewer hotels in the pipeline than Novotel, but they are, on average, larger properties.  And whilst Rezidor have been steaming ahead with their Radisson and Park Inn brands, vying with Accor for first place in the development stakes, the average size of a new Park Inn in Africa, at 137 rooms and suites, is way below Le Meridien’s average size of 320 (in three hotels), and who just pip Park Inn by 6 rooms to take the Number 10 slot.

One thing to be wary about, however, when looking at signed deals, is that not all those rooms are under construction, and therefore their realization, especially in many of the very difficult business environments that typify Africa, cannot be certain.  We have analysed the deals reported by the chains as to whether they are on site or not, and the ranking looks different.

2011 Hotel Development in Africa

Top 10 Brands by Pipeline Status

Rank Brands Hotels Rooms Rank – All Deals
Total Onsite Construction
1 Hilton 10 2,807 2,269 80.8% 2↑
2 Radisson Blu 16 3,327 1,737 52.2% 1↓
3 Ibis 14 2,150 1,310 60.9% 3 ↔
4 InterContinental 5 1,532 1,276 83.3% 7↑
5 Holiday Inn 6 1,900 1,168 61.5% 6↑
6 Novotel 11 1,955 1,005 51.4% 5↓
7 Le Meridien 3 965 965 100.0% 10↑
8 Marriott 4 851 851 100.0% - ↑
9 Sofitel 5 803 708 88.2% - ↑
10 Crowne Plaza 2 693 693 100.0% - ↑

Hilton and Radisson Blu change places, and InterContinental moves up the ranks, closely followed by its stable mate Holiday Inn.  Etap, Kempinski and Mövenpick are replaced by Marriott, Sofitel and Crowne Plaza, with more rooms actually under construction.  Le Meridien and Marriott have 100 per cent of their signed rooms on site – but a relatively small pipeline compared to the other global giants.

The above analysis is of brands – many of the hotel companies are multi-brand players, so it is relevant to look at it per group as well:

Hotel Development in Africa 2011

Top 10 Companies by Number of Planned Hotels and Rooms

Rank by Hotels Rank by Rooms
1 Accor 41 1 Accor 6,371
2 Rezidor 23 2 Rezidor 4,286
3 Marriott 12 3 IHG 4,125
4 IHG 13 4 Hilton 2,967
5= Hilton 11 5 Starwood 2,784
5= Starwood 11 6 Marriott 2,503
7= Lonrho 6 7 Mövenpick 2,053
7= Mövenpick 6 8 Kempinski 1,000
9 Kempinski 5 9 Lonrho 913
10 Rotana 3 10 Rotana 700

2011 Hotel Development in Africa

Top 10 Companies by Pipeline Status

Rank Company Hotels Rooms Rank – All Deals
  Total Onsite Construction
1 Accor 41 6,371 3,728 59% 1↔
2 IHG 13 4,125 3,137 76% 3 ↑
3 Marriott 12 2,503 2,503 100% 6↑
4 Hilton 11 2,967 2,429 82% 4↓
5 Rezidor 23 4,286 2,271 53% 2↓
6 Starwood 11 2,784 1,727 62% 5↓
7 Wyndham 3 676 676 100% - ↑
8 Mövenpick 6 2,053 661 32% 7↓
9 Lonrho 6 913 608 67% 9↔
10 African Sun 2 396 396 100% - ↑

All the majors are there, dominated by Accor, which has such a large pipeline that, although only 59 per cent is on-site, the number of rooms under construction still exceeds IHG’s by around 20 per cent.

Where is all this activity taking place?

2011 Hotel Development in Africa

Top 10 Countries by Number of Rooms

Hotels Rooms
1 Egypt 19 5,967
2 Morocco 30 5,297
3 Nigeria 23 4,811
4 Algeria 14 2,575
5 Libya 6 1,937
6 Ghana 7 1,346
7 South Africa 8 1,009
8 Tunisia 4 762
9 Equatorial Guinea 4 661
10 Ethiopia 3 482

All of the five North African countries feature in the top ten destinations for branded hotel developments – driven either by the booming tourism industries in the likes of Morocco, Tunisia and Egypt, or by the opening up of the oil-based economies in Algeria and Libya.  Over half of Accor’s pipeline is in Morocco and Algeria, underlining their commitment to North Africa.

The availability of finance in North Africa has historically been greater, sourced domestically, from Europe or from the Middle East, with foreign investors perceiving less risk there than in the more volatile sub-Saharan Africa.  How times change!

Nigeria, Africa’s largest country by population and the power house of West Africa, has almost 5,000 rooms under contract, with thousands more in the “almost” category – it seems that every hotel operator is seeking a presence there.  New openings recently have included Radisson Blu and Four Points by Sheraton in Lagos, and many groups have hotels under construction there, including Accor, Legacy, IHG, Protea and Hilton.

As before, signed deals is one thing, actual activity is another:

2011 Hotel Development in Africa

Top 10 Countries by Pipeline Status

Rank Company Hotels Rooms Rank – All Deals
Total Onsite Construction
1 Egypt 19 5,967 4,579 77% 1↔
2 Nigeria 23 4,811 3,086 64% 3 ↑
3 Morocco 30 5,297 2,658 50% 2↓
4 Algeria 14 2,575 2,135 83% 4↔
5 Ghana 7 1,346 1,028 76% 6↑
6 Tunisia 4 762 762 100% 8↑
7 South Africa 8 1,009 754 75% 7↔
8 Equatorial Guinea 4 661 661 100% 9↑
9 Kenya 3 540 540 100% - ↑
10 Rwanda 2 529 529 100% - ↑

Nigeria and Morocco change places, and one of Africa’s brightest stars, Rwanda, joins the list, with a Radisson Blu and a Marriott under construction in Kigali.

Equatorial Guinea, one of Africa’s smallest countries, has 4 hotels under construction, 3 by Accor - a Sofitel (their second) and an Ibis in Malabo, and another Ibis in mainland Bata – and a Hilton close to Malabo airport.  South Africa remains at a surprisingly low 7th position, but with several companies now locating developers there (Hilton, IHG, Accor, Rezidor and more to follow) we can expect more activity there, as well as elsewhere on the continent, in coming years (as this was being written, Hilton announced the opening of their first hotel in Cape Town, included above in their pipeline).

On average, the global hotel brands have less than 2 per cent of their total rooms in sub-Saharan Africa, and with rapid expansion of their existing and upcoming hotels in China, India and other developing and developed countries, this percentage is likely to drop further.  But the rewards in Africa are high, and with growth rates of 6 per cent and above, it is regarded by many as the most profitable place to do business – just oftentimes slower than “normal”.

For those in the know, the opportunities in Africa are as vast as the continent itself.

Trevor Ward

W Hospitality Group, Lagos


Being in a service industry, it will come as no surprise to learn that the payroll is the largest cost a hotel incurs.  In some environments it could be as much as 30 per cent of revenue, whilst in others below 15 per cent may be the norm.

Hotels need staff in all areas – from the front door to the back door, from the porter to the security guard in the receiving bay.  Some spend all their time with the guests, others may never see one, but each has an important role to play.  Staff are there to ensure the smooth running of the hotel, both “on stage” and behind the scenes, and to meet the customers’ expectations.  And it is the latter that determines the level to which a hotel is staffed-up.

At the top of the quality tree, in deluxe hotels, the customer’s expectation is that every need is catered for – they are met at the airport in a limousine (= driver), the car door is opened for them on arrival (= doorman), their luggage is taken from the car into the hotel (= porter), a refreshing towel is there waiting for them in the lobby (= customer relations), even, in some hotels, a member of staff just to press the lift button for you (= true luxury!) – you can see where this is going, at that level of quality the guest expects and pays for service, and it takes multiple staff members to deliver that.

At the other end of the scale, the budget hotel has reduced everything to a minimum, where they are basically selling “sleep”, to a customer who doesn’t expect much more, and is certainly not prepared to pay for it.  Self-park, self-tote, increasingly even self-service check-in – at the extreme, our budget hotel customer may not even see a member of staff, nor need to.

But if the deluxe hotel customer pays more to get more service, and the budget hotel customer pays and receives less, why the range of cost to the hotel investor?

There are many reasons – natural differences in wages from one country to another, the level of unionisation, housing, transport and other benefits paid, legislation on working hours, the accrual of end-of-service payments – all these can make a difference.  As can the practice of charging service charges to customers - in Nigeria, it is normal practice for hotels to charge 10 per cent on top of the quoted room rate as a service charge, and this is distributed to staff according to complicated points systems, or as a flat rate.

Accordingly, staff in the leading hotels enjoy higher pay than their counterparts in other sectors of the economy, particularly when the hotels are experiencing high occupancies and average room rates.  A waiter with a basic monthly wage of around US$150 per month could see that figure doubled or tripled when the hotel is doing well.

Another factor can be the employment of expatriate staff.  Large hotels may have 10 or more expatriates working there, at a cost per person ranging from around US$50,000 per year, to in excess of US$200,000.  This cost includes the basic salary, but also flights home two or three times per year, housing, schooling, medical benefits, pension and so on.

International management companies will normally want to bring in expatriate staff to any hotel they manage in Africa in order to benefit from their international experience, and their knowledge of the brand’s operating systems and philosophies.  Such skills are not always available locally, but a succession plan needs to be put in place (to comply with the law in some countries) so that the post can be indigenised over time.

Investors need to be aware of and monitor the employment costs associated with the operation, but must also understand that the hospitality business cannot function without well-trained and experienced staff and managers – unless they can invent the “automatic hotel” which, by the way, I will not be staying in!

Trevor Ward

W Hospitality Group, Lagos


Affiliated to

Plot 10, Ayo Babatunde Crescent, off Oniru Market Road, Lekki Phase 1, Lagos, Nigeria
+234 (01) 295 6236


Greetings Dear LinkedIn Colleagues Can you participate in a short survey for us? Please?! We’re doing some research into decision making and risk in the hotel industry, and we would be so pleased if you could fill in our surve…

phoneenvelopelocation-arrow linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram