19 Oct

Shaping the investment attractiveness of Africa’s hotel sector

According to a United Nations population report, it is anticipated that by 2050, more than half of the world’s population growth will be in Africa. The African Development Bank (AfDB) anticipates that Africa’s middle class will reach 1.1 billion by 2060.

This rise of a substantial middle class across Africa brings at the same time an insatiable taste for modern infrastructure and consumption. The increase in consumer spending power from the younger, modern and more middle-class consumer, means a broad appetite for services from the entertainment, leisure and hospitality industry. With it will come the demand for the types of hotels that you may expect to find only in more developed economies such as the United States, Europe or Asia. Whether it is exquisite room, spa facilities, excellent cuisines – or meetings, wedding venues and other special events, Africa’s growing urban populations are pursuing places to entertain, work and socialise. But how are Africa’s private-equity hotel investors benefiting from the continent’s growing and evolving demographic?

Strong local demand

As the commodity price downturn continues to claim casualties across the continent, countries such as Zambia are benefiting from a combination of a growing tourism sector and rising urban population.

According to the United Nations World Populations Prospects, Zambia’s population is estimated to be over 17 million with an annual growth rate of 3.3%. Much of Zambia’s population is concentrated around Lusaka in the south and the Copperbelt Province in the northwest. With 44% of the population concentrated in a few urban areas, this marks Zambia one of the most urbanised countries in sub-Saharan Africa. The country offers competitive operational costs as well as a motivated English-speaking labour force, making it an attractive investment destination – particularly for private equity investors such as Quantum Global Group.

Through its US$500m investment vehicle which capitalises on emerging opportunities and prime assets in Africa’s hospitality sector, Quantum Global acquired the city landmark InterContinental Hotel Lusaka, which is situated at a prime location in Zambia’s capital.

Read more: Demographics are shaping the investment attractiveness of Africa’s hotel sector

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