Eye on West Africa
I have to say that getting new hotels open in Africa is so frustrating. I looked back at an article I wrote for Business Traveller Africa last year, welcoming the forthcoming opening of such hotels as the Noom in Conakry, Marriott in Accra, Four Points in Ikot (Nigeria), the Ramada Plaza in Lagos, the Kempinski in Accra and others. And with the exception ofthe Kempinski, none of these promised hotels have materialised.
Now, given the current malaise in many countries and cities in the region, that might not be such a bad thing.With hindsight,with occupancies are at an all-time low right now, opening new hotels could add to the pain. But that’s not the point. These multi-million dollar projects have got investors’ and lenders’ money tied up, and are still not earning any revenue. So why is it that building hotels in Africa, particularly in West Africa, seems always to take longer than expected? I’m not talking about short delays of a few weeks or months; these are delays measured in years.
At the W Hospitality Group we arejust compiling the data forthe annual Hotel Chain Hotel Development Pipelines survey, and of the 365 deals – signed by the hotel chains for the branding (and in most cases management) of new hotels yet to open – 84 of them, almost 25% of the total, were signed in 2012 or before. One deal, which shall remain nameless, was signed in 2006! In normal circumstances, a hotel takes three or four years to build, so they should have been open by now, shouldn’t they?
Why are circumstances so ‘abnormal’ in West Africa? There are a number of reasons, and I’m sorry to say that one of the main ones is a lack of expertise. The region lacks skilled design teams, engineers, project managers, and sitesupervisors (although, as ever, there are exceptions). A hotel is a really complicated building, and when a hotel chain gets involved, the structurehas to be designed and built to their specifications. A lack of knowledge usually comes across as a refusal to accept new things, so employing a team without the requisite know-howoften results in an expensive and time-wasting need to tear down the work and start from scratch to get it right. A good project manager can overcome that, but then too few hotel projects have had good project managers to lead the team to a successful outcome.
Finances also play a significant role in the delay of construction and completion. I have been witness to many projects that are left hanging because the owner does not have all the funds in the bank, or at least firmly committed,at the outset. He begins work on site anyway, hopeful that the money will be found. Often it isn’t, at least not when it is needed, so work has to stop, the contractor moves off site, and it takes time for them to remobilise. Look at the Le Meridien project in Lagos, on which no work has taken place on site for over five years, since the contractor stopped work. Despite strenuous efforts by the owner, he has not been able to secure the funding to recommence work. The building was supposed to have two towers, one hotel, the other luxury apartments, atop a podium with restaurants and retail. The shell of a single tower, open to the elements, stands there looking lonely.
Another problem is the owner who just won’t stop designing the hotel.To ensure successful completion, it’s really important to ‘freeze’ the design, and then build it. Some owners, however, insist on making changes. Contractors don’t stand in the way, happy to agree to these changes because they can charge extra for knocking bits down and doing them again. Aside from the cost the change in design carries, the time takes to make these changes moves the project further and further away from a timely completion.
Add to that, delays at the port with containers stuck for ages, political and bureaucratic interference, cost overruns, to name just a few, and you begin to understand why projects are almost always delayed. The sad part of this whole saga is that these delays are very often within the control of the team working on the project, including the owner, and can often be avoided.
Then there’s the example of the Radisson Blu, also in Lagos, where the owner decided not to proceed with the operator he had previously engaged, “changed horses” after starting construction. Radisson insisted on design changes in order to meet their brand standards, and that resulted in not just a delay for redesign and reworking on site, but additional cost.
Not all delays in opening can be avoided, of course – in Conakry, both the Sheraton and the Noom hotels have been delayed because of the Ebola outbreak in 2014. At that time, the Noom was almost ready to open, but the owners were unable to get the technicians in to test and commission equipment, they were not prepared to take the risk of travelling to the country. And various hotels have experienced delays in securing that list licence or permit from the government, and cannot legally start operations without it.
But the delays caused by poor planning and management of the project can be avoided. Do the maths – a 200-room hotel charging $200 a night, which is delayed opening, is losing revenue of upwards of $25,000 a day. Now, tell me, by how much did you cut the professional fees, by using that cheaper firm?
W Hospitality Group, Lagos