Hotel Chains Grow in Africa
Foot traffic was light in an area of Cape Town, South Africa, Aug. 19. One group estimates the whole of Africa will lose 45%, of its tourism income this year.
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In the wake of the coronavirus, Africa’s tourism industry cratered, but the continent remains loyal to the largest hotel chains in the world. Major hotel chains ranging from Marriott International MAR 0.71% to the Radisson Hotel Group and Accor, the AC +0,17% largest European hotel company, are not only staying onboard their African companies but are determined to remain on the track if their footprints do not grow. Companies regard sub-Saharan Africa as underserved and poorly established in hotels, predicting the rise in demand for both business and leisure travel as the pandemic declines. 

Trevor Ward, the owner of W Hospitality Group, a consultative company in Lagos, Nigeria, operating across Africa, said, “I have not heard anyone claim we are no longer concerned with Africa.” “The play is all right for the long term.” 

Travel restrictions and social distancing have kept business and leisure travellers at home, disturbing the key revenue source for the region. In a baseline situation, Africa would be lost 10,9 million, or 44% of its tourist employment and $75 trillion, or 40%, of its tourism revenues this year, according to an estimate by the World Travel and Tourism Council. On a percentage average, the fall is much higher than that of the Asia-Pacific region and the Americas. 

A new stage of consolidation in the lodging sector, in which big chain companies are taking over and branding up distressed properties leading to faster expansion across Africa, says hotel chains, as well as analysts, has come into disruption due to the Covid-19 collapse. Part of this is because hotel chains bring little risk or expense when converting an independent property, at least compared to building a new property; the converted hotel becomes part of the chain which collects franchise charges for the revenue of the hotel. 

The trend is present in emerging markets but in sub-Saharan Africa, in particular, due to the lack of hotels in emerging hubs like Addis Ababa, Ethiopia and Abuja, Nigeria. The growth of hotel chains is certainly just one slice of the various hotel markets in Africa. 

Data Source: WSJ

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