Budget and Mid Market Hotels represent a huge opportunity for growth in Africa as hotel brands look to expand, as almost all of the internationally flagged hotels in Africa are of a luxury standard. This was the key finding at the African Hotel Investment Conference being held on the 27th September in Nairobi, Kenya on a panel being hosted by Michele de Witt, Managing Director of Horwath HTL South Africa, part of Horwath HTL the world’s largest hospitality consulting network and Chairperson of the Federated Hospitality Association of Southern Africa.Michele was joined on the panel by industry experts Derrek Anderson Vice president of development for central, eastern, and southern Africa at Hilton Worldwide, Ewan Cameron – Chief Executive Officer at Lonrho Hotels, Thorsten Purkus, Vice President Feasibility and Development Finance EMEA at Hyatt International and Rohan Patel – a Director of the Sankara Hotel Group Kenya Limited.
There were other compelling factors as to why the economy segment was a compelling choice for the region, with lower build costs, reduced staff and payroll expenditure and pre-existing global distribution networks already in place. Many well established brands also give a level of comfort to banks and other financial institutions when securing financing, making acquisition of debt easier.
Michele de Witt said, “This market segment represents a tremendous solution to many of the markets in Africa, primary, secondary and on occasion tertiary. Travel in Africa is largely business, NGO, Government/ Embassy related which places downward pressure on rate, which with high development costs make luxury properties a challenge in terms of yielding a return on investment. There is an emergence of a middle class in Africa that will stimulate domestic travel. In addition, many African countries are seeking growth in inbound tourism via regional travel as opposed to foreign [Europe and the Americas] for which a mid-market product would be well suited”.
