Dubai: Africa is developing into a lucrative market for hospitality-related investments, according to industry experts at The Hotel Show in Dubai on Monday.
Economic growth in Sub-Saharan Africa is expected to reach more than five per cent on average between 2013 and 2015, according to The World Bank.
Guy Wilkinson, managing partner at Viability, a hospitality consultancy, pointed out that economists have said the region’s middle-class has grown and consumption is on the rise.
Thus, there is potential for tourism to grow in Africa.
“The total number of rooms [in the pipeline] is almost 40,000 [for Africa] at the moment, with just over 200 hotels — this is just from the chains and not all of them,” Wilkinson said, sourcing research by W Hospitality.
He said that there are 5,000 hotel rooms that have been added to the pipeline over the last year.
Some of the hotel operators that are present in Africa include Starwood and the Carlson Rezidor Hotel Group.
Nairobi in Kenya is a popular destination for companies that want to operate in Africa due to its expanding business infrastructure, according to Wilkinson. He added that Kenya is known for leisure activities, including safaris.
Challenges
However, there are challenges to setting up hotels in the region.
The cost of building a hotel in Africa is higher than in the Middle East.
According to Steven W. Miller, senior Vice-President of business development at contractor Shapoorji Pallonji International, the cost is “15 to 20 per cent” more than what it costs to build a hotel in Dubai.
Some of the reasons for this include the high cost of importing and storing supplies, as well as keeping expatriate staff, he said.
Also, local banks have not developed a model to finance hotels, according to Meelis Kuuskler, managing partner at Hospitality Design Partnership.
