September and October have been my personal conference season this year – first the Africa Property Investment Summit (APIS) in Johannesburg, then the Africa Hotel Investment Forum (AHIF) in Nairobi, and I’m just back from the International Society of Hospitality Consultants’ (ISHC) annual convention in Panama. Quite a diverse selection of events and destinations, but there’s a link.
At APIS, there was a major focus on West Africa, and particularly the opportunities for retail development there. Whilst Angola, Mozambique and Zambia were all discussed, the most attention was paid to Ghana and, unsurprisingly, Nigeria, dubbed “the consumer play” by one of the speakers. In markets grossly undersupplied with formal retail, the talk was about how many malls, both major and neighbourhood, could be developed in each country. A link was made to the hotel industry by a presentation by BGI Properties at AHIF. BGI are a USA and Ghana based developer of retail malls in West Africa, and are convinced of the synergies between their sector and the lodging industry. Malls planned by them in Accra, Kumasi, Takoradi and elsewhere in Ghana, as well as in Lagos and Abuja, are morel likely than not to include a hotel component, alongside the normal anchor stores, line shops and service outlets such as restaurants and bars.
Mixed-use developments typically bring enhanced benefits to the owners, tenants and users, with the whole being greater than the sum of the parts. In particular, there is a clear opportunity to develop budget and economy hotels integral to a shopping mall, with the latter providing the “non-sleep” facilities that the hotel operators would rather do without, seeing them as a labour-intensive distraction to the provision of overnight accommodation. The café in the mall becomes the restaurant, the laundrette provides a laundry service, the shops provide the travellers essentials, and so on. And, of course, the hotel provides a useful source of “footfall” for the mall’s shops, plus the marketing of the hotel includes marketing of the mall, as an attractive destination at which to stay overnight.
And so to Panama, where a presentation by Smith Travel Research revealed that Accra and Lagos have some of the highest average room rates in the world, mostly because of a lack of supply in the face of rising demand, increasing far higher than in the USA or Europe. Rising demand brings opportunities for investors, at all levels of the market, and whilst the 4 and 5 star segments tend to see the most activity to begin with, later on - and I believe Accra and Lagos are now at that stage – developers look also at the midscale and budget segments. These hotels provide an alternative to their higher-priced forerunners, and cater more to the domestic and regional markets.
As Accra and Lagos continue to develop, driven by the virtuous circle of a growing economy and the resultant increase in the middle class, expect to see some combined retail and lodging developments coming on stream, and new, exciting places to stay.
W Hospitality Group, Lagos