Michael Ejekam, Director, Real Estate in Actis,explained to BusinessDay in an interview , USD$254bn hospitality market in upward swing as investors plan 30,000 additional rooms.
Michael Ejekam, Director, Real Estate in Actis : In the course of the next few years, investors shall be putting additional 30,000 rooms into Nigerian’s growing hospital industry which, a couple of years ago, was estimated to be worth $49.9 billion with $203.7 billion in untapped potential and $253.5bn market size.
By the last count, about 20 hotel groups with 34 brands will be making this happen as part of renewed interest in, and growth of hospitality industry in Sub-Saharan Africa, especially Nigeria, which presents investment opportunities in key sectors given its sheer size and potential.
“Africa is booming and with this growth, the continent’s cities are experiencing an influx of residents in search of work and better standards of Living”, says Abimbola Olashore of Lead Capital Plc, explaining that the Eurozone crisis and slowdown in growth have weakened advanced economies from their strong position as investment destination.
“It is Africa’s potential to offset the sluggishness in more developed markets that’s appealing to global players, explains Andrew McLachlan, Carlson Rezidor Vice President for Africa and Indian Ocean Islands.
“What has really happened is that post the economic crash in 2008/2009, the rest of the world has really woken up to Africa,” says McLachlan, adding, “there’s been such good news coming out of Africa from a GDP growth point of view, showing better telecommunications, improved security, political stability, and improved airlift; it’s really become a sort of new scramble back into Africa.”
Analysts say the present trend is driven by travel and business, also noting that Africa, particularly Nigeria, is a growth phenomenon of the 21st century. “Whereas the rest of the world is growing at 3.3 percent, Africa at 5.5 percent, Nigeria’s GDP is growing at approximately 7 percent”, Michael Chu’di Ejekam, Director, Real Estate in Actis, explained to BusinessDay in an interview.
Because of these opportunities, from Lagos and Kigali to Nairobi and Johannesburg, the world’s best known hoteliers are targeting Africa’s growing urban centers to benefit from a rising number of business travelers and a huge undersupply in available rooms.
Patrick Fitzgibbon, Hilton Worldwide’s senior vice president of development for Europe and Africa, notes that “there’s a growing demand in these capital cities because they are the centers of business, of government and of commerce –all of which have hospitality needs”.
The Nigeria market remains a focal point for Africa-bound foreign investments and this is understandable from the standpoint of the country’s demographics, fast-paced urbanization, growing middle class with strong spending power, rich oil resource and its status as a trading economy.
“Nigeria is strategic and key part of our consideration for further investment in West Africa. We are definitely looking to invest in Nigeria. Nigeria is a considerable focus to us. We believe in that country and it is just an accident of timing that we are not yet there. But surely, this is something we are looking closely at”, Ivor McBurney, Kingdom Hotel Investments’ (KHI) Vice President of Finance and Development Projects, told BusinessDay in Ghana.
KHI is a leading international hotel and resort real estate investment company headquartered in Dubai with focus on emerging markets. It has a balanced portfolio of hotel properties in upscale and luxury market segments and has built a diversified hotel and real estate portfolio with access to 18 operational hotels in 13 countries across four continents. The company’s strategic hotel partners are Four Seasons Hotel and Resort, Fairmont Raffles Hotels and Resort, Movenpick Hotels and Resort, Swissotel and Intercontinental.
With investment in North Africa (Egypt and Morocco) and Sub-Saharan Africa where they have invested in Ghana, Kenya and Zambia, McBurney sees a great future for the hospitality market in Sub-Saharan Africa and, according to him, “the hotel industry in West Africa, given the level of economic development, is reaching a new level of luxury and sophistication; that is how I think the industry is going to develop in the near future”.