By Samson Echenim
Philippe Doizelet, managing partner, Hotels, Horwath HTL, West Africa’s leading hospitality consultant, has identified four fundamental factors that are fuelling an increasing flow of investment into the hospitality sector in West Africa.
Doizelet named them to include Air connectivity, better economic growth, currency and demographics.
Today, Africa is seen as one of the most promising regions for hotel developers. Aside from small chains and independents, four global hotel groups dominate signings and openings on the continent. Over the last four rolling quarters, as of September 2019, Accor, Hilton, Marriott International and Radisson Hotel Group have opened 2,800 rooms and signed deals for 6,600 rooms. Across Africa, hotel development remains important in most advanced economies.
In West Africa, Nigeria is back on the development scene thanks to emerging regional destinations beyond Abuja and Lagos. Francophone Africa is also moving fast.
He said: “It used to be that the main hubs for flying between West African countries were Paris and Casablanca. However, thanks to the rapid growth of Ethiopian Airlines and other carriers, such as Emirates, Kenya Airways and Turkish, the situation has changed; and new routes are offered to travellers. For example, it is now possible to fly direct from New York to Abidjan, where the African Development Bank is located, and to Lome, where the Central Bank of West African States is situated… and with increased travel comes increased commerce and demand for accommodation.”
The second factor, according to him is the superior economic growth of many West African countries, which are expanding substantially faster than many of the world’s most advanced economies.
“According to World Bank data for 2018, several, such as Benin, Burkina Faso, Gambia, Ghana, Guinea, Ivory Coast and Senegal are growing at six percent per annum or better, more than double the world average, three percent. That is a potent attraction to international investors. However, that’s not all; as prosperity grows domestically, so too does the local financial services industry. It then looks to invest client monies; and a good proportion of that capital gravitates towards real estate projects and, in turn, new domestic infrastructure,” he said.
“Currency is the third factor,” he noted, adding, “Later this year, the CFA franc, which is pegged to the euro, is planned to be dropped and 15 countries in West Africa (ECOWAS) will adopt the Eco, a new, free-floating, common currency, designed to reduce the cost of doing business between them and so increase trade. However, whilst there is great enthusiasm for the Eco, it is somewhat qualified because the economies of participating countries are at different stages of development and governments may find it difficult to adhere to agreed guidelines for managing their economies.”
On demographics, Doizelet said, “The population is young and the fastest growing of any major world region. It is also characterised by a hunger to learn and confidence about the future. People are seeing their standards of living improve and they are keen to seize opportunities.”
“We are seeing that mindset reflected throughout the hospitality industry; it’s incredibly refreshing and it’s attracting business” he said.
However, the picture is not all rosy. Horwath HTL also identifies four factors which threaten economic progress; they are security issues, political agenda, governance and increasing public debt.