African hotel development offers rewards

Developing hotels in sub-Saharan Africa is a promising prospect, say international hoteliers speaking at the Hospitality Investment Conference Africa being held in Durban this week.

South Africa may be suffering a depression in demand, but other African countries are still showing a good growth rate, says John Downs, associate at Field Fisher Waterhouse LLP. Downs does, however, warn that international investors are being very cautious when looking to invest abroad at present and projects in Africa may suffer as a result.

“Africa has some fantastic opportunities,” says Downs, “but we need to convince investors to come out and see these.”

Derrek Anderson, VP development Central, Eastern and Southern Africa for Hilton Worldwide, agrees that the rewards of investing in Africa are huge. “The performance of our sub-Saharan African hotels is good. We’ve seen double-digit growth in RevPAR since 2008 for these. The economic troubles are specific to South Africa and not these markets, which are doing very well.”

Creating jobs and opportunities that were not originally there in sub-Saharan African countries are a great reward, adds Lars Hansen, MD Dreams Leisure Angola. “Angola is still a simplistic market, not as sophisticated as South Africa, and the rewards come in taking advantage of the human resources available.”

Hansen does warn against the over-saturation of high-end product in these markets as this will create an unsustainable environment for hoteliers. He says that five-star product should be limited in markets to prevent the same sort of oversupply which has been witnessed in South Africa.

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