Marriott International, Inc. has recently become the largest hotel company in Africa according to published information, and nearly doubled its presence in its Middle East and Africa region to more than 160 hotels and 23,000 rooms as it completed its acquisition of the 116-hotel Protea Hospitality Group (PHG), based in South Africa on the 1st April 2014. Marriott now operates or franchises more than 4,000 hotels in 79 countries.At the same time, Marriott said that its pipeline of new hotels in the Middle East and Africa, including Protea’s pipeline, is now more than 65 hotels and 14,300 rooms, including more than 20 hotels and 3,000 rooms in Sub-Saharan Africa.
Marriott’s new Protea portfolio consists of 10,148 rooms in seven African countries including South Africa. The company now manages, franchises and leases hotels across the Protea Hotels brand (103 hotels), comprising a full and diverse range of outstanding hotels and resorts; the award-winning lifestyle boutique Protea Hotel Fire & Ice! (2 hotels); and the superior deluxe African Pride Hotels collection (11 hotels). In addition to its industry-leading 79 hotels in South Africa, Marriott’s Protea portfolio also has 37 hotels in Malawi, Namibia, Nigeria, Tanzania, Uganda and Zambia.
Arne Sorenson, Marriott International’s president and chief executive officer, said, “Today marks a new beginning. We can now officially say ‘molweni!’ {Xhosa}, ‘sawubona!’ {Zulu} and ‘hello!’ to South Africa and ‘welcome!’ to our approximately 15,000 new associates at both managed and franchised hotels across Protea’s portfolio. We look forward to integrating the superb Protea team into the Marriott International family, and together, to work toward new opportunities for growth and advancement throughout South Africa and the continent.”
Alex Kyriakidis, president and managing director of Marriott International’s Middle East and Africa (MEA) region, said, “Today is the culmination of months of highly productive collaboration between Protea and Marriott International teams. We are delighted that such a tremendously dedicated, talented and effective team, which has been so well-led by Protea Chief Executive Officer Arthur Gillis, is now joining the Marriott International family. With the addition of Protea’s regional knowledge, expertise and infrastructure, we are incredibly well-positioned to continue growing in one of the fastest expanding economic markets in the world.”
According to the World Bank, Sub-Saharan Africa is expected to grow at a more than 5 percent pace through 2015.
Mr. Kyriakidis said that Mr. Gillis will become Non-Executive Chairman, Africa Development for Marriott International, focusing on exploring opportunities for new African hotel growth for all of Marriott International’s brands. In addition, Mark Satterfield, currently chief operations officer for Marriott International’s MEA region, will relocate to Cape Town, Protea’s headquarters, to act as business leader overseeing the integration of the two companies. He will continue to report to Mr. Kyriakidis.
As previously disclosed, Marriott paid approximately 2.02 billion rand, or approximately US $200 million at current exchange rates, which represents roughly 10 times anticipated pro forma 2014 calendar year EBITDA (earnings before interest, taxes, depreciation and amortization) excluding transaction costs.
As part of the transaction, the previous owners of Protea Hospitality Group created an independent property ownership company that retained ownership of the hotels PHG formerly owned, and entered into long-term management and lease agreements with Marriott for those hotels. The property ownership company also retained a number of minority interests in other Protea hotels. Marriott now manages approximately 45 percent of Protea’s rooms, franchises approximately 39 percent, and leases approximately 16 percent.
Editors Note: I have spent two weeks this March/April looking at Marriott properties in South Africa, most of which are recently refurbished. Staff are well trained and efficient and very positive about being part of the Marriott family, whilst the properties look in very good condition as well as good locations.
In a market which will grow 10% a year Marriott seem well placed to take profitable advantage of the growing internal and external tourism expansion on the Continent
