By Christopher Lund, James Wrenn & Thuku Kimani
Doing Business in West Africa
Africa has a lot of potential when it comes to hotel development, expansion and capital growth. The African Development Bank estimates Africa’s middle-class population at 350 million, a segment of the population that presents potential travellers for the growing travel and tourism industry. Hotel development plays a big role in more advanced economies such as South Africa, Kenya, Tanzania and Rwanda. While this growth has been slower in West African countries, some of the major cities in the region are speeding up with development.
There is a rise in hotel investment and development in West Africa as investors take an interest in emerging destinations in the region. The most attractive markets in the region include Ghana, Ivory Coast, Nigeria and Senegal. These markets are particularly attractive not only due to development opportunities but also due to political stability and security. Additionally, West Africa is home to some of the fastest growing economies with Nigeria being one of the largest economies in the continent. Various governments in the region have put in measures to promote the travel and tourism sector, for instance the $ 1 billion investment in Ivory Coast’s tourism sector announced last year.
We can expect to see a push in domestic and regional tourism as more international operators enter the market.
Tourism Developmental Potential
Colliers international compared West African countries on eight underlying factors to measure their potential for further tourism development:
High Potential Markets:
Nigeria, Ghana, Senegal and Ivory Coast are the most attractive markets based on a 10-factor analysis of the fundamentals that support tourism development.
Nigeria has the highest potential, due to its large domestic market, however, its reliance on fossil fuels has slowed economic growth in recent years. This has increased the appeal of higher growth markets such as Ghana and Ivory Coast. Both of which recorded a GDP growth of over 6% in 2019 and offer distinct opportunities for further development.
Potential for further development is present in the Senegalese market, however in terms of the fundamentals addressed in the ranking, it performs below than the three markets mentioned previously.
Low Potential Markets:
Countries that have not experienced stable periods of growth in the past decades have performed lower in the ranking. As a result, first movers into these stabilising markets, such as Liberia, face increased operational risks, but potentially higher returns provided the country remains stable in the coming years.
Bringing Nigeria’s Outbound Tourism Spend home
Focus: Lifestyle
Although it has the largest tourism spending in the region, almost 60% is spent on outbound trips in 2019.
Focusing on a Lifestyle hotel product, you have the flexibility to create a development that targets both those who won’t travel abroad and the international aficionados. Lifestyle hotels offer an attractive domestic destination, that appeals to international travellers through a unique experience close to home.
How to: Lifestyle
Lifestyle properties are built from the ground up around social interaction and a focus on creating memorable experiences for those on the property:
Needs:
- Multi-functional lobbies
- A unique design identity
- Open plan signature F&B concepts
- Strong wellness themes
Wants:
- Integration into a larger mixed-use development or neighbourhood
Access to wider customer base with dual-branded properties – Ghana
Focus: Dual Branded Properties
Although dual-branded properties are not a new concept, there is increased interest among large operators in this field. Dual-branded properties comprise of two hotel brands from the same operator in a single building.
Dual-branded properties allow owners to diversify their market base and increases their market reach. These types of properties often share the same reservation system and provide an opportunity for hoteliers to capture different segments.
Synergy among the brands is key to ensure the success of such projects.
Dual-branded properties often tend to be more complicated than the typical single-branded properties. It is important for developers to satisfy the needs of both brands.
Needs:
- Consistent public space design
- Different guestrooms to match brand standards
- Smooth transitions between differently branded spaces
Wants:
- Urban area locations and mixed-use developments
A growing leisure destination – Ivory coast
Focus: Leisure
The existing Ivory Coast hospitality market has established a sizeable domestic market, contributing 86% to the total of USD 4.04 billion generated by the tourism industry in the country. This domestic market is driven by corporate spending; however, several initiatives positively impact the outlook for the market Leisure Segment:
The “Sublime Cote d’Ivoire” initiative, to increase the countries global exposure, was launched in 2019. A USD 5 billion initial pledge was obtained from Arab Investors based on opportunities in the western area of the Ivory coast, composed of unspoiled mountains and beaches.
How to: Resort
A Resorts are heavily influenced by their location which dictates the experience it provides. Nonetheless, the following considerations should be made:
Needs:
- Access for international travellers
- A unique destination to build the resort’s concept and experience
Wants:
- International resort operator provides a guarantee of quality to travellers in developing leisure destinations.
- Incorporate the countries natural beauty and agricultural produce to promote EWAA based leisure travel.
Despite the impact of COVID-19 in the global and African markets, an opportunity exists for investors looking towards West Africa.
A growing population accompanied by a period of improved economic stability in key markets have helped to foster greater regional connectivity. The region presents multiple opportunities for the development of hotels and their subsequent operation.
Credit: Source link
