> Hotels As Contributing Factor To Economic Growth

Hotels As Contributing Factor To Economic Growth

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



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