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

21 Aug

13 new hotels to enter Kenya in next five years

hotels

A total of 13 hotels are set to open their doors in Kenya over the next five years, growing the bed space by more than 2,400 rooms, according to a report by PricewaterhouseCoopers (PwC).

Pegged on a growing economy and demand for bed space, the study by the advisory firm indicates the hotels are expected to open their doors in the country by 2021 including additional units by Radisson, Marriot and Best Western brands.

“These developments, along with a stable local economy, are attracting international hotels to Kenya. Sheraton, Ramada, Hilton, Best Western, Radisson, Marriott, and Mövenpick are among the international brands scheduled to open hotels in Kenya during the next five years,” PwC says in Hotel Outlook report.

The growth has been accelerated by the increasing number of domestic and international tourists.

“Kenya benefited from the lifting of travel advisories … and growth in domestic tourism in a strong economic environment, as well as a series of incentives introduced by the government,” reads part of the report.

The incentives include elimination of VAT on park fees, removal of visa fees for children as well as the reduction in park fees by Kenya Wildlife Service.

Others are the waiver of landing fee for charter flights in Mombasa and Malindi.

PwC says guest nights, which declined a cumulative 15 per cent between 2011 and 2015, also rebounded with a 2.9 per cent increase in 2016. The average room rate edged up 2.2 per cent in 2016 and room revenue grew 4.9 per cent.

The advisory firm expects a decline in the occupancy rate over the next two years before a rebound from 2019.

International hotel management chain Best Western has taken over city hotel Meridian and branded it Best Western Plus.

Lazizi Premier opened its doors in May, becoming the first airport hotel to begin operation.

This is expected to be followed by the completion of Four Points by Sheraton Nairobi Airport and Hilton Garden Inn, which are in the final stages of completion.

This will be the second property by Sheraton which took over management of the Four Point Hurlingham, previously Best Western Premier.

Source from Nation