Where should hotel investors put their money? Africa. That was the unanimous verdict from a panel of experts during the Institute of Hospitality seminar I had the pleasure of hosting at World Travel Market.
Africa is a continent experiencing huge increases in hotel demand and there is currently a massive shortage of product, said Patrick Fitzgibbon, senior vice president development, Europe & Africa, Hilton Worldwide. By 2050 Nigeria, Africa’s most populous country, will be home to more people than the USA, he added, and forecasts suggest that Africa’s economy will keep growing for the next 20 years. Russell Kett, chair of HVS’s London office, agreed: “We have just opened an office in Africa and the growth is phenomenal. Our difficulty is keeping up.”
How can African countries attract inward investment for existing or new hotels? Remove as much risk for the investors as possible and provide a good level of information about trading, business and leisure demand and tourism statistics, said Jon Hubbard, head of investor services, EMEA, JLL’s Hotels & Hospitality Group. One aid to expansion in Africa was modular construction techniques, said Fitzgibbon. Hilton works with a Chinese firm which makes fully finished hotel rooms and corridors in a factory in China which are then shipped around the world. The super-structure and public areas are added on location using local workforces. This was proving an efficient way of building mid-market hotels with a lifespan of 25-30 years, he said.
Transparency is important, as well as making the passage through the regulatory approval process as easy as possible. Fitzgibbon added that the more information a country makes available, the more investment there will be. Investors will look at the following:
- Repatriation of funds: how easy is it to take funds out of the country?
- Transport infrastructure: how easy is the destination to reach? What is the taxi service like once guests arrive?
- The visa process: how easy is it for international visitors to get a visa?
It was acknowledged that hotel development in Africa could be challenging, but the panel said that there were many places where barriers had been recognised and dealt with.