Eye on africa
Although Covid-19 had a devastating impact on global travel and tourism over the past two years, there are many reasons to be more optimistic as the hospitality industry recovers with restrictions easing around the world.
Most of our hotels, like many others, were closed during the pandemic but all of them have reopened, fuelled by a significant rise in domestic and regional travel. Interestingly, our pipeline continued to grow throughout the pandemic, both in the Middle East and Africa, strong signs that both markets are not just resilient but continue to be incredibly important to hotel owners, investors, and operators. There have definitely been delays in hotel developments and openings during the pandemic, but the demand for hotel operators has remained strong. According to W Hospitality’s 2021 African hotel chain development pipeline report, there were 447 hotels in the pipeline, representing 81,999 rooms, up 5 percent from 2020.
Our growth has primarily been driven by our independent hotel management model. Third-party management has been the most prevalent hotel operating model globally for years, and we feel we’re at a tipping point in the Middle East and Africa. Seven years ago, we identified a considerable gap for independent hotel management companies that was limiting the growth of smaller, private hotel owners and larger institutional investors. Subsequently we became Africa’s first and only independent hotel management company to operate assets in this way. we now operate 12 hotels and resorts with another 12 in the pipeline, 6 of which are set to open this year.
As a resilient market with 22 percent growth in its hotel room pipeline since 2017 and the second fastest growing tourism industry in the world in 2019, we have seen our biggest growth in Africa, most notably in the mid-size hotel segment. One of the key considerations of hotel owners and investors in selecting us as the operator for their properties, has been our international hotel management expertise combined with strong regional experience. We have seen a big push in the franchise model from hotel owners and brands and it’s become the most prominent model for our African portfolio. To us, this is a natural progression and the sign of a maturing market. Hotel owners look for an operating model that gives them more control over their operations with the opportunity to be involved in the day-to-day operations. The increased demand for franchising is also facilitated by hotel brands. It works well for them too, especially in markets where they don’t have a local presence. It’s evident that the franchise model is here to stay, and we see this trend continue, and even accelerate in coming years.
Our growth has primarily been in East Africa, where we opened our first hotel. Every country we entered we saw organic growth through referrals by investors and owners, demonstrating our capability to deliver strong results. This region is home to strong destination brands, like Kenya, and right before we announced our entry in Uganda, the Government unveiled its new destination brand, a sign the region has big plans.
We’re now expanding into Central and West Africa. Also here, governments are proactive in putting themselves on the tourism map. Earlier this year, Liberia unveiled its new tourism strategy, with the aim to generate $120 million from tourism by 2025.
Over the past 20 years, tourism has become vital to African economies. In 2019, the industry accounted for seven percent of Africa’s GDP and contributed $169 billion to its economy. Besides a growing emphasis on tourism, the fast-paced growth of Africa’s travel industry can be attributed to several factors which bode well for the sector, including improved accessibility and air connectivity, relaxed visa rules, and a growing population that fuels intra-continental travel. This contributes to more demand for branded and international-standard accommodation and we’re seeing corresponding interest from both brands and local investors to capitalise on this opportunity.
* Bani is Founder and Managing Director of Aleph Hospitality