Hospitality industry still in need of branded hotel rooms

Friday October 13 2017

Ubumwe Grande Hotel Rwanda that was recently

Ubumwe Grande Hotel Rwanda that was recently acquired by DoubleTree by Hilton. PHOTO | CYRIL NDEGEYA 

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Reluctance by local hotel developers to work with international brands has left the Africa with a huge deficit of branded hotel rooms, limiting the continents ability to tap into the global hospitality trade.

Experts say that indigenous developers often find the additional cost of bringing their properties to the standards demanded by international chains a major barrier.

The growth of local markets that are not keen on international brands is another incentive to stay local, they add.

According to results of research unveiled by the W Hospitality Group at the African Hotel Investment Forum in Kigali this past week, despite having some of the highest investment rates on the continent, East and West Africa are the regions most affected by a deficit in branded hotel rooms.

The research shows that nine countries in Africa do not have a single branded hotel, eight have only one, while almost half the continent (25 countries) have two or fewer brands present.

Only ten countries have 10 or more brands present, while just 28 countries (53 per cent) have branded hotels located outside the national capital or in the main commercial city.

Status quo

Experts have attributed this status quo to the fact that local hotel developers have been slow at working with international hotel brands hence settling for their local hotel brands which are largely operating without branded rooms.

“A large number of local property developers in many African countries are reluctant to work with international brands, hence operating hotels with unbranded hotel rooms, it’s easier to get these brands if the hotel is an international brand” said Karl de Lacy, the International Development Director for Best Western hotels and resorts.

“Cost has been a big factor, the additional investments required to upgrade a property to fit a global brand has also been an issue with local developers” he said.

When asked to explain form an industry perspective how branded hotel rooms can be low at the time the continent is registering a commendable value in hotel investments, he said the biggest opportunity in Africa is now in mid-scale hotels because of the mass market the segment has.

Experts have observed that in Africa local developers don’t care much about branded rooms provided they have local clientele coming to the hotels, that many of these clients are also not keen to look room brands

“The biggest opportunity is in mid-scale, the international brands cater for a certain level of clientele, but the more local hotel owners understand the opportunities they have if they work with international brands the better” said De Lacy.
On investments he said the growth in property has been commendable but many have not transitioned into operating as international brands which explains why many operate with un-branded hotel rooms.

“We want hoteliers to be successful, a happy hotelier is one that is engaged with a brand” he noted.

Huge opportunities

Hotel industry analysts have said that this shortfall in supply shows that there are still huge opportunities to develop hotels in many countries in sub-Saharan Africa.

Africa currently has 301 hotel projects in the pipeline, accounting for 57,011 rooms, or 11.0percent of the continents existing room supply.

Demand has been growing in many markets and that with careful planning, and good advice there can be an opportunity to generate substantial returns on investment in the hotel industry.

The majority of upcoming new supply this year are in sub-Saharan Africa, with 59 per cent of rooms in the development pipeline, North Africa is the largest single region with 41 per cent followed by West Africa 33 per cent and East Africa 11 per cent.

Nigeria has up to 6,100 branded bedrooms across 41 hotels, with 21 brands and 14 hotel companies represented in 9 cities and 61 more hotel projects and more branded bedrooms 10,313 in the pipeline, however a country with a population of almost 192 million, a lot needs to be done.

Despite having a number of sizeable properties, Uganda has less than five hotels managed by international brands.

Disagreement between developers and international brands has seen two international brands – Carlson Rezidor and the Hilton, eschew the management of Uganda’s grandest property, the 296 room Pearl of Africa than opened doors this month under the One & Only brand.