Home-grown hotel brands, including Rotana and Jumeirah, are pushing into Africa, lured by the continent’s underserved market.
Abu Dhabi-based Rotana, which has a property in the Sudanese capital Khartoum and the Egyptian Red Sea resort of Sharm El Sheikh, expects to enter some of the major business centres of Sub-Saharan Africa.
“While there tends to be initially a focus on the luxury sector, the greatest opportunities are in the budget and midscale segment,” said Trevor Ward, the managing director of W Hospitality Group, a consultancy in Nigeria. “And while previously there was a focus on Arabic countries, the UAE companies are looking at using them as a stepping stone to the rest of Africa.”
Opening this year is Arjaan hotel apartments in Kinshasa, the capital of the Democratic Republic of the Congo.
Rotana also said this month it would build its first property in Lagos, Nigeria, under the mid-range brand Centro. The property is not expected to open until 2020.
Lagos is one of the most expensive cities in the world when it comes to hotel costs for business travellers, who spend on average US$331 a day in the city, higher than in Dubai at $254, according to a survey from Business Travel News survey last March.
Ghana, Mozambique and Angola are also in focus for Rotana as there is a similar supply gap in the markets there, said Omer Kaddouri, the company’s president and the chief executive.
Last year, the company signed a contract to manage a five-star property in Dar es Salaam in Tanzania, which is expected by 2017. In 2012 it said it would build a 230-room property in Mauritania under its Rayhaan brand, expected to open in 2018
Some sub-Saharan countries have dismal rankings in the World Bank’s Ease of Doing Business Index.
“It is difficult to do business there. The infrastructure and logistics might not be modernised, but it is difficult to do business everywhere. But we are going into Africa with our eyes wide open,” Mr Kaddouri said. “Dubai and Abu Dhabi are fantastic locations in how easy it is to travel and live, but it is a competitive market for the industry, and making money here and creating a good occupancy and good rates here is difficult.”
Other home-grown hotel brands are also looking at Africa for expansion.
The Dubai-based Jumeirah Group has a few in the pipeline.
“We have management agreements in place for hotels in Egypt and Morocco,” said Piers Schreiber, a spokesman for Jumeirah Group.
Other target markets are Angola, Ghana, Nigeria and South Africa for Jumeirah hotels and its mid-range brand Venu, he said.
Another Dubai-based hotelier, Shaza, is working on projects in Morocco, Egypt and Turkey.
While the economic growth in Sub-Saharan Africa is expected at 5.7 per cent this year, up from 5 per cent last year, challenges remain that could depress investment in the region, the IMF said in November.
These include the Ebola outbreak, fiscal vulnerabilities of some countries and a general slowdown in emerging markets.