Assessing Contributions of Indigenous Hospitality Brands to Africa’s Economy

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Fidelis Nwoka

African-owned hospitality brands have successfully established their relevance to the economic growth of the continent. Nothing best attests to this than the fact that at the moment, they account for 40 per cent of the hospitality market in the continent’s tourism industry.

What this translates to is the fact that they contribute significantly to the estimated $194.2 billion contribution of the hospitality sub-sector to Africa’s economy, which represents about 8.5 per cent of the continent’s GDP. They have also provided a good number of the 24.3 million African jobs the sub-sector has created – about 6.7 per cent of total employment on the continent.

They have been able to do this through a combination of factors that include provision of services that match those offered by international hotel groups – the same standards that obtain anywhere in the world – and ability to incorporate African cultures into their services, which is what appeals to local hotel patrons, and is what international brands have not been very successful in doing.

African hospitality groups are also embarking on rapid expansion at the same rate international brands are doing. We are seeing more indigenous hotel groups, especially from South Africa and East Africa, expanding outside their territories to other parts of Africa in a bid to fully exploit the gold mine that tourism has become on the continent.

For instance, Tsogo Sun, a South African hotel which has taken over from Protea as Africa’s biggest indigenous hotel group after the latter was acquired by the Marriot Group, has established strong presence in Nigeria managing Southern Sun Hotel at Ikoyi, Lagos. Another South African hotel group that is currently operating in Nigeria is Legacy. The group has also established presence in Ghana.

Some of the African hotel groups are going beyond building of hotels to include, in their baskets of offerings, consultancy services and management of hotels for local brands in different parts of Africa, with wonderful results to show.

An example is Icon Hotels Group Africa (IHGA), a leading Kenyan hospitality group that has made a name establishing and successfully running a chain of hotels within and outside its home country, especially in East Africa. The hotel group is making inroads into West Africa, and has already berthed in Nigeria.
The group handled the successful turnaround of Best Western Hotel on Victoria Island, Lagos, which was rebranded as BWC Hotel. The hotel is today one of the best hospitality outfits in Lagos. The IHGA is planning to expand its operations in the country.

The hotel group is currently involved in the development of the $30 million, five-star Best Western Premier Breeze Hotel in Cotonou, Benin Republic. Its involvement in the project is by way of financing up to completion and commissioning. It will also manage the hotel when completed.

A major contribution African hospitality groups are making to the growth of the continent’s economy which cannot be ignored is their interest in training local manpower in the sub-sector. The benefit of this initiative is that more and more Africans are getting involved in an industry that is very critical to the continent’s economic growth. They see the growth as their own personal growth, as well as that of their children and generations unborn.

This is something international brands are not interested in doing, because of the mainly profit motive of their involvement in the sub-sector and, indeed, the tourism industry. You find in most cases situations in which the top management positions in international hotels are occupied by expatriates. This has nothing to do with shortage of Africans to fill such positions, but the notion that the latter do not possess the requisite knowledge and skill to run international hotels. The success of Africans in running wholly indigenous hospitality outfits has given the lie to this notion.

The African Continental Free Trade Agreement (AfCTA) establishing the continent as the world’s largest free trade area is expected to become operational in June, this year. The arrangement is going to boost intra-African trade which will increase travels within the continent. This is an opportunity for African hotel brands to assert their relevance in the continent’s economic growth, as there would be need for hospitality services in virtually every nook and cranny of the continent. At the moment, at least four out of 10 travelers within the continent is an African. This number is expected to increase when AfCTA comes into existence.

After the current bickering involving Anglophone and Francophone countries in West Africa over the sub-region’s choice of single currency, there will be an agreement, and it is taken as a given that the area will have a single currency. This is expected to increase movements within the sub-region. For hotel owners, this means increased business opportunities, as there would certainly be need for more hospitality services. It is an opportunity international hotels are also hoping to exploit, if it is considered that they are either currently expanding their operations in the sub-region or have announced plans to do so.

As more opportunities open in Africa’s hospitality industry, one area indigenous brands may need to consider is safari management, an area in which they have demonstrated superior knowledge and skill over their international competitors. It is an area that is said to generate over 70 per cent revenue in the hospitality sub-sector.

With the growing involvement of African entrepreneurs in hospitality, it won’t be long before indigenous brands take full control of an area in which their ability to blend intercontinental and local tastes would give them an edge over international brands, with positive outcomes for the economy – in the areas of revenue generation and job creation.
Nwoka, a businessman, lives in Port Harcourt