I’m staying at the Hotel Presidente, the old one at the north end of the Marginal. Great views of the bay (which is fast disappearing, as they sand-fill – catch it while you can). Apart from the strange shade of green paint that they have used (at some time in the past, a painter stood back, looked at his work, and said “My, that looks good”. What kind of sick person IS that?), the physical hotel isn’t too bad, old and tired, but aren’t we all? But my tip for staying here is to avoid contact with the staff AT ALL TIMES. OK, grin and bear it at check in, insist that your name IS what you wrote on the registration slip (twice) and what it says in your passport, regardless of what the receptionist wants your name to be, and you might get the room you reserved. After that, DON’T have anything to do with any of them – the objective of them all is to p*ss off the guests at every point of contact. YOU HAVE BEEN WARNED.

The internet service in the bar is good – just ask at the bar for the code, you don’t ned to buy anything, and you don’t have to be staying in the hotel either – but you may need to bluff that out – room numbers start on the 9th floor, 901 to 914, 1001 to 1014 – got that?

Happy Travels!

Trevor.

We recently launched our 6th annual survey of what the international hotel chains are doing in Africa – their pipelines of new deals, hotels to be opened over the next 5 years.  We came up with a total of 215 hotels, with almost 40,000 rooms, an increase of 10 per cent on last year.

For the first time, the number of rooms in the pipeline in sub-Saharan Africa (SSA) far exceeded those in North Africa – 23,283 in SSA vs 16,449 in North Africa. On a per country basis, North Africa is still way ahead of SSA, but its share is declining, as the chains focus more on the fertile grounds of the 49 countries in SSA.

And in SSA, it is West Africa that dominates:

Interesting that southern Africa, with mature tourism industries, and the destination of a larger proportion of leisure travellers, has the smallest share in SSA, with no activity at all in countries such as Malawi, Botswana and Zimbabwe.

In West Africa, a total of 14 countries are seeing development activity from the chains including, for the first time in many years, Liberia, Togo and Niger.  A lot of that is being driven by two African chains, Onomo and Mangalis.  The latter emerged on the scene just last year, and already has a confirmed pipeline of 15 hotels and 2,200 rooms, a larger pipeline than international giants such as IHG and Accor!

As in previous years, Nigeria has the largest pipeline of all African countries, 40 hotels with 6,600 rooms.  Not surprising, with (now) the largest economy on the continent, the largest population and the huge potential for growth.  Everyone’s looking for a presence in Lagos, and many are also looking at Abuja, with one or two, such as Hilton, Best Western and Carlson Rezidor going into the secondary cities.

Ghana and Senegal also appear in the top 10 countries, but on a much smaller scale than Nigeria, with approximately 1,000 rooms apiece.

Elsewhere in Africa, South Sudan makes its debut in the pipeline data with two hotels totalling 435 rooms between them, including one by Sheraton, both planned for 2017 openings.  There are 10 African countries which have no existing branded supply; however, this list of “hotel deserts” is shrinking fast, as seven of them – Burundi, DRC, Liberia, Mauritania, Niger, Sierra Leone and South Sudan – now have hotels in the 2014 development pipeline.  Burundi, DRC and Mauritania all have hotels that are scheduled to open in 2014, and in Sierra Leone, Carlson Rezidor have very recently opened the Radisson Blu, the first internationally-branded hotel in the country.

The above data relate to deals that have been signed – in many cases they represent only pieces of paper!  Looking at what’s happening on ground paints a different picture.  In North Africa, 75% of the planned rooms are actually under construction, whilst in SSA it is only 56%, and this last statistic includes several hotels on which work started and then stopped, for one reason or another.  And whilst Nigeria has the largest signed pipeline in Africa, the country sinks to 4the position in the rankings of rooms under construction, with just 37% on site, compared to over 80% in Egypt, Algeria and Libya.

This reflects both the pace of the growth in the pipeline in Nigeria, as well as the slow pace of getting projects started in that country.  Currently, 62 per cent of the hotel rooms reported to open in 2015 are not yet on site (and thus almost certain not to meet that schedule) and only one of the projects planned to open in subsequent years (the 150-room Marriott Lagos) is actively on site.

The renewed interest in Cote d’Ivoire (4 hotels, 772 rooms, all in Abidjan and all under construction) in recent years is as a result of the return to political stability, after many years of civil war, which is encouraging economic growth in the country. The planned return of the African Development Bank to Abidjan from its temporary base in Tunis will also boost the demand for hotel accommodation in the city.

New countries, new brands, and a clear focus on sub-Saharan Africa.  Those are the main stories in the 2014 hotel chain development pipeline report.  More hotel chains are opening development offices in Africa, or in some cases in the Middle East focused on Africa, and generally growing their resource base, in order to take advantage of the strong economies on the continent and the hotel deals that arise as a result.  Africa has never been an easy place to do business, and is likely to remain more challenging than Europe, or even China.  But most of the continent is so lacking in quality hotel rooms, not just in the capitals but also in the secondary cities, that it is our belief that the pipelines in sub-Saharan Africa will continue to grow, and that even more international players will enter the market.

The full report can be downloaded from www.w-hospitalitygroup.com

 

Trevor Ward

W Hospitality Group, Lagos           

[email protected]

A growing economy sits uneasily next to poverty and division, writes William Wallis.
Nigeria has often come with superlatives attached. At independence in 1960, it was said to be the African superpower in waiting. After civil war and years of military misrule had turned that hope on its head, Russian diplomats posted to Lagos were still describing Nigeria as “Africa plus something”.

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Click here to download: Investing in Nigeria-Strife casts shadow on progress

For over ten years now, I’ve heard stories about oversupply in the Lagos market, because of “all those hotels that are under construction”.  And, they continue, that means Lagos’ room prices are going to come down.

Well, consider the following.

Since 2003, the number of “acceptable” quality hotel rooms in Lagos has increased from about 1,100 to 4,000 today, and increase of almost four times.  Occupancies have come down from the dizzy heights, that’s for sure, but are still a perfectly acceptable 70 per cent.  And average room rates, net of all taxes and service charges, are about US$280, with little or no increase for the last five years.  Granted, that means that, in real terms, the average rate has decreased, because of inflation, but they haven’t crashed like we’ve been told was going to happen.

And I forecast that we will see some big increases in room rates over the next three to four years, if revenue managers are prepared to take advantage of the likely future supply-demand imbalance.  Because it’s a myth.  There are not “all those hotels under construction” any more.  The building boom has been and gone.

We track new supply coming into the Lagos market very carefully, counting the major projects with signed management deals, and other significant developments.  And we can find only 188 new rooms due to open in the rest of 2014, 515 rooms in 2015 and 307 in 2016.  In three years, that’s just over 1,000 rooms, or 25 per cent of the existing supply.  If they all happen in that timescale – I’m not aware of any hotel in Lagos that has opened on time, with delays typically measured in years.

The experts say that Nigeria’s economy is growing at 7 per cent per annum.  If that is the case, then the economy of Lagos must be growing by at least 10 per cent each year, probably more, being the economic powerhouse of the country, and with little or no growth in other parts of the country.  Demand for hotel rooms has grown at an annual compound rate of about 14 per cent since 2003.  Supply growth of 25 per cent in the next three years could therefore be matched by demand growth of almost 50 per cent, and that means that prices will go up – it’s market forces, it’s supply and demand.

Is this good for the customer?  Well, none of us want to pay more, but the hotel products available today are of a much higher standard than 10 years ago, and we have a right to demand much more for our money.

And spare a thought for the owners and general managers of the hotels.  Visitors to Lagos will know all about our “epileptic” power supply, with the lights on-off, on-off throughout the day and night.  Since the privatisation of the power industry, it has got worse.  One general manager told me that before privatisation, he had a power bill of about US$150,000 per month, of which about US$90,000 was diesel to power his generators, and the remainder the cost of power from the grid.  Now, after the much-lauded privatisation, he is paying almost US$250,000 per month (an eye-watering US$3 million a year!), of which almost US$200,000 is for diesel.

Operating costs in Lagos are high.  As in other parts of the world, the industry is a target for government taxes and licences, so just to keep the hotel open, multiple levies must be paid.  Here’s the latest one – a “Merriment Tax”.  You can just imagine it, can’t you, the government officials sitting there thinking “what can we get them for next?”.  “I know, Mr Chairman, people get together in hotels and have fun, and that must be taxable”.

So beware – Lagos hotel prices are going to increase again, a lot of the money you pay for your room is being fed into the furnace to keep the lights on, and whether you’re happy about that or not, you’ll still get hit with the Merriment Tax.  Enjoy (or not).

 

Trevor Ward

W Hospitality Group, Lagos           

[email protected]

 

Welcome to the sixth edition of our annual survey of the international hotel chains' development intentions and activities in Africa – the Pipeline Report. Our research tracks hotel development deals in the 54 countries of Africa. There are of course, other deals being discussed besides those listed in our report, which we will include, hopefully, in future surveys; this one includes only those deals that are signed and confirmed – although not necessarily yet actually under construction, as this report shows.

W Hospitality Group - Africa Pipeline Report 2014

    To download the report, kindly fill the form below. The report will also be sent to your email address for your convenience.

    Economic growth is all about creating jobs.  The demographic dividend in sub-Saharan Africa, where the population under the age of 25 (i.e. the working age population) is 50 per cent of the total, is not a dividend if the African youth is unemployed.  Then it becomes a social liability, as learned skills are unused and become forgotten, unsocial behaviour becomes the norm, and unrest ensues.  A job is not just about earning income – having a job brings identity, self-confidence, status, social cohesion and networks, and contributes to a peaceful society.

    Research recently undertaken by my company, W Hospitality Group in association with Hotel Partners Africa, reveals that employment in the hotel sector in Africa is set to grow substantially in the coming years.  We estimate that, based on the contracts for new hotels signed by the international and regional brands, 136,000 new hotel jobs will be created in 2014, 87,000 in 2015, 70,000 in 2016 and 27,000 thereafter, a total of 320,000 real, waged jobs.

    Add to the total the jobs in new hotel deals which the chains will sign in the future, jobs in independent hotels, the employment in related sectors such as restaurants, bars and clubs, in suppliers and support sectors such as farms and taxi services, and the hospitality sector can be seen to be just as important as others, if not more so.

    The World Travel and Tourism Council estimates that the travel and tourism industry employs 11 per cent of the global workforce, second only to subsistence farming, which, whilst important, is a relatively “non-productive” activity as far as the national economy is concerned.

    Whilst the overall headline numbers sound impressive, the growth in demand for hotel workers varies from country to country.  We see North Africa creating 115,000 hotel jobs across 5 countries and Sub Saharan Africa (SSA) creating 165,000 across 23 countries.  The 5 North Africa countries are in the top 10 in Africa while Nigeria leads the way in SSA with the creation of 53,000 hotel jobs.  It is followed by Ghana with 11,000, Angola with 9,000, Ethiopia with 8,800 and Uganda with 8,500.

    In North Africa, where the hotel industry is more developed and where growth is relatively slower (the hotel pipeline grew by 9% from 2012 to 2013), the employment marketplace is likely to be characterised by the recruitment of large numbers of junior people, and rapid promotions for the most able individuals.

    In Sub Saharan Africa, where growth is forecast to be a much faster 23% and where, outside South Africa and a few other countries, there are far fewer people with hospitality industry experience, we see three major trends: an influx of top management from abroad, a battle for talented middle management, and substantial investment in training programmes.

    The first is controversial – all those people in Africa seeking jobs, and the hotel sector brings in expatiate management staff?  Well, that’s because there is a real need, and the employment of large numbers of local staff relies on it.  Look at Kenya, where there are very few expatriate hotel managers.  Why is that? Because the level of education there tends to be much higher than in other regions, especially in West Africa.  There are just not enough trained and experienced indigenous hotel managers in countries like Nigeria to fill the positions available.  Added to that, the international hotel chains need someone to lead their operations who is steeped in the company’s culture, their systems and procedures.

    Yes, that will change over time, and it is going to be slow, but an indigenisation programme is not just socially responsible – it makes good economic sense.  Think of the cost of relocating a hotel manager and his family from another region of the world to Africa, the housing, children’s schooling, flights back home twice a year, medical insurance, and so on.  That adds up to a large sum, so any international hotel chain wants to keep the number of expatriates to a minimum, and because of the financial model of hotel management agreements, is incentivised to do so.

    The war for good middle management is “normal”, but when growth is rapid, as is occurring in countries such as Nigeria and Ghana, there’s a problem.  Employers (mostly in the non-branded sector) with little or no experience poach a waiter from their competitor’s hotel, and make him or her restaurant manager.  Another employer poaches the restaurant manager from another hotel, and makes him their food and beverage manager, who then becomes the general manager of another hotel – all within the space of a very few years.  There is no skills training taking place, and virtually no experience being gained, and without both, the employee, the employer and the guest all suffer.  You never appreciate the value of experience, until you have it!

    Training programmes are therefore essential, both in-house and in the formal education sector.  Given the almost total lack of useful government intervention in that sphere, at least in West Africa, the private sector must take the lead.  Complaining about the lack of government training schools for the industry will get us nowhere!  “But why should I train my staff, when the competition will just go and poach them?”  That is an actual quote from a Lagos hotel owner.  This tortured logic is, of course, a death knell for that person’s business, but not the industry as a whole, because others are more enlightened, particularly (but by no means only) the international and regional chains.

    They have raised the bar in many places here in West Africa, and it looks like, from those figures I quoted before, they will (and must) continue to do so.

    Trevor Ward

    W Hospitality Group, Lagos

    [email protected]

     

    It is important, for the health of the growing hospitality industry in Lagos that more concrete action is made, not only to register and license hospitality establishments, but to also begin to standardize and classify them.

    [spiderpowa-pdf src=”https://w-hospitalitygroup.com/wp-content/uploads/2014/03/Need-for-more-Regulation-Standardization-and-Classification-in-the-Lagos-Hospitality-Industry.pdf”]

    Click here to download: Need for more Regulation, Standardization and Classification in the Lagos Hospitality Industry

    Economic growth is all about creating jobs. The demographic dividend in sub-Saharan Africa, where the population under the age of 25 is 50% of the total, is not a dividend if the African youth is unemployed. Then it becomes a social liability, as learned skills are unused and become forgotten, unsocial behaviour becomes the norm, and unrest ensues. A job is not just about earning income – having a job brings identity, self- confidence, status, social cohesion and networks, and contributes to a peaceful society .

    [spiderpowa-pdf src=”https://w-hospitalitygroup.com/wp-content/uploads/2014/03/An-Eye-on-West-Africa-April.pdf”]

    Click here to download:An Eye on West Africa – April

    With Africa being touted as the next big thing by the likes of Michael Wale, head of Europe, Africa and Middle East at Starwood Hotels & Resorts, in an interview with Financial Times for its website, it’s no surprise that the African hotel industry has received a lot of attention from the international press recently. Websites like the Financial Times site and Travelmole are running stories about the expansion of the major chains into hitherto “uncharted territory” .

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    Click here to download: An Eye on West Africa – March 18

    Ghana, one of Africa’s smaller countries, ranked 31st in terms of area and 12th in terms of population, is certainly punching above its weight when it comes to investment in the hotel industry.  Unlike many countries, where hotel development is focused almost entirely on the capital city, Ghana is seeing investment in a number of other destinations, as well as in Accra.

    It doesn’t seem that long ago that Accra was a sleepy, highly attractive alternative to the noise and chaos of Lagos, and we would visit for the weekend, or extend business trips beyond Friday night, to enjoy the slower pace of life there.  Today, Accra’s traffic can be truly “’orrible!”, certainly rivalling anything that Lagos has to offer!  And there are construction cranes everywhere, in and adjacent to Airport City, as well as downtown Osu and Ridge, and in the stretch in the middle.  Even the beach is seeing residential and other towers going up.

    A lot of this is attributed to (or, some would say, blamed on!), Big Oil, which came to town and stayed once the Jubilee Field was proved to be viable.  Production commenced in late 2010, and has yet to peak.

    But note that Ghana’s economy was growing at between 6 per cent and 8 per cent annually before oil production contributed to a spike of 14 per cent in 2011.  In 2008, the last “normal” year before the start of commercial oil production (2009 and 2010 were affected pretty much continent-wide by the global financial crisis), Ghana was in the top 5 of non-oil African countries in terms of GDP growth.  Unlike many oil-producers, Ghana has several other viable sources of growth and jobs, including mining (gold), agriculture (cocoa) and services (finance, tourism).

    Accra, the political and commercial capital, and the main entry point by air, has seen the majority of investment in new hotels to support, and contribute to, Ghana’s growth, benefiting from the boost from the new oil and gas industry, and from the diversified economy.  The latter, particularly an increase in activity in manufacturing and services, is vitally important in order for the hotel sector to thrive and grow.

    One of the newest hotels in Accra is the 260-room Mövenpick, which opened in 2011.  Owned by Kingdom Hotels Investments, the hotel is on the site of the former Ambassador Hotel, and is the largest hotel in Accra.  With two full years of trading under its belt, management have focused on the average daily rate, and whilst its

    average occupancy is below the market average, its average room rate is some 20 per cent above its nearest competitor, and its RevPAR is 10 per cent higher.

    But the Mövenpick is no longer the newest game in town, that slot was taken by African Sun’s Amber Hotel in Airport City, which opened (finally!) in late 2013.  This is one of those rarities in West Africa, a hotel which the operator has leased from the owner.  The hotel has sat there, apparently completed, since mid-2012, but with one severe problem – the tenant (African Sun) was, I am reliably informed, not able to finance the purchase of the furniture!  Today the hotel is still not entirely open, with only around 100 of the total 200 with beds and curtains!

    Future openings in Accra include the 267-room Kempinski Hotel, on the site of the former racecourse, and the 209-room Marriott.  Both hotels have been under construction for several years, and although opening of both is slated for 2014, I’ll believe it when I see it!  Certainly opening before them is Louvre Hotels 104-room Tulip Inn in South Legon, close to the Accra Mall.  This is Royal Airport Hotels’ former Travel Express Hotel, which was sold a while back to raise funds for other projects.

    There are several other planned hotels in Accra – I’m aware of potential developers talking to Hilton, Hyatt, Radisson Blu, Park Inn, City Lodge and others, but nothing yet signed.  Even Hong Kong-based Shangri La, a deluxe hotel and resort brand, list a potential new hotel in Accra on their web site!

    Is there a danger of oversupply?  There’s always a danger of oversupply!  It happens in any market from time to time, but the likelihood in Accra is, in my opinion low.  Look at how long it has taken the Kempinski and the Marriott to – well, not open.  Both have been under construction for some years, and this has become established as the norm, not the exception.  If both open at the same time, say at the end of 2014, there will be indigestion for a while whilst they are absorbed, but currently there is nothing else under construction of any note, so they and other hotels will benefit from increasing demand (as the economy continues to grow) and as nothing else enters the market.  And many would say that the shortage of rooms at certain times of the year means that the city is unable to accommodate the larger conferences and other events which want to hold there.

    Royal Airport Hotels were mentioned above as the seller of the Travel Express Hotel – they are also the owner of the highly successful 168-room Holiday Inn in Airport City – surely the only airport hotel ever to turn away aircrew demand because they could fill the hotel with business travellers?!  Patrick Fares, owner of Royal Airport Hotels, recognised the potential of Takoradi some years ago and acquired the former Atlantic Hotel there, which he has now renovated and extended to be a 150-room Best Western Plus Hotel, opening this year, and vying to be the first internationally-branded hotel in Ghana’s oil capital with the 100-room Protea Hotel, under construction there.

    Takoradi is the centre of the oil and gas industry, Ghana’s “Port Harcourt” so to speak.  The port there is one of the centres for the export of cocoa, and there are plans by Chinese construction firm Huasheng Jiangquan Group to invest over US$2 billion to develop an industrial park in Shama, creating some 5,000 jobs.  This is part of the Government of Ghana’s drive to develop Takoradi and the Western Region, and follows Lonrho Ports’ announcement of an investment to develop a free port close to Takoradi.

    Up in Tamale, in the north of Ghana, Ganaa Hotels Ltd. is currently building a 110-room hotel, due to open this year, and are in advanced discussions for it to be branded as a Best Western Plus, giving the chain a “triangle” of three hotels in the country (Accra, Takoradi and Tamale).

    Nothing concrete yet, but investors are known to be looking at Tema, Ghana’s eastern port close to Accra, and at Kumasi.  One such investor is the New York and Accra-based BGI, who are primarily planning to develop retail malls, initially in Accra, Tema and Kumasi, and who recognise the synergy between retail and hotels.  They are currently seeking brands who will join with them in these developments.

    Outside the urban centres, there is interest in resort properties, catering to the leisure and conference markets.  The newest opening is the 84-room Royal Senchi Hotel close to Akosombo, close enough to Accra to be easily accessible, but far enough away to generate weekend and other short-break leisure traffic.  There is also growing interest in Ghana’s coast, with interest in the Gomoah Fetteh area, where the world-class Whitesands resort is located, and in Ada, where the River Voltga meets the Atlantic Ocean.

    Ghana has always been regarded as “Africa-lite”, an attractive destination to do business and for leisure trips.  And, despite Accra’s “go-slow” traffic these days, it remains one of Africa’s success stories.  I believe we will see new hotel deals signed in 2014, adding to the existing properties, and adding to Ghana’s attractive tourism offer.

    Trevor Ward

    W Hospitality Group, Lagos

    [email protected]

     

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