THE PIPELINE : AFRICA
when relevant , upscale / luxury brands ( Pullman , Sofitel ) in main cities ,” says Fabrice Mauny , COO , Africa , Accor . “ Most Sub-Saharan capitals , primary and secondary cities can sustain these brands ,” adds Starwood ’ s George .
Louvre Hotels Group , for example , recently opened a 3-star property in Annaba , Algeria .
Solid foundation Like many emerging markets , one of the biggest challenges for brands seeking to expand via new-build properties is that , in many countries , infrastructural support lags economic growth .
“ Importing construction materials and fittings is of equal importance to the development costs ,” George says . “ Port authorities are vital to ensuring fast , simplified and secure importation of relevant goods into countries .”
Road transport costs on most of the continent are extremely high , and delays at borders are common . Poor
Hilton Malabo , Equatorial Guinea
transportation and other infrastructure problems can raise development costs by up to 25 %, according to Ward .
But , other industry insiders contend that building in Africa is no more difficult than it is in other emerging markets . “ Lack of infrastructure is definitely one of the key challenges in the region ,” says Dusit ’ s Vickers . “ However , every market or location has its challenges .”
Regional operators take a matter-offact approach . “ Good forward planning , having all our permits in order and financial guarantees in place and setting a realistic construction timetable should mitigate potential delays in the course of a project ,” Gillis says .
High finance Not all industry insiders agree that the investment community is coming through for African development either .
While there is consensus there is more interest from the international
Protea Hotel Fire & Ice ! Menlyn near Johannesburg community and more regional capital becoming available , operators could face additional hurdles to getting projects financed , Ward says . “ Debt is still often very short-term , and there are high interest rates ,” he notes . “ Equity investors don ’ t understand that they cannot get dividends from day one .”
However , Ward concedes the euro peg of Francophone West Africa ’ s currency does make financing easier there .
Some see a brighter picture . “ Both local and international capital and bank debt are available for quality developments , and Africa ’ s banks are providing considerable stability ,” says Hilton ’ s Fitzgibbon . Starwood ’ s George agrees that capital is available for “ deserving projects ,” though not necessarily under the terms or at the rates investors want .
Generally , government support is also expanding , at least for local owners and developers . “ More affluent economies — Botswana , as an example — have improving levels of funding through state agencies available to locally based developers or owners ,” Abdul-Karrim says . “ Nigeria , for example , has a lot of personal / company-based development investment appetite with individual resources playing an especially important role . Emerging markets such as Cameroon , Chad and others are increasingly receiving favor from international funding agencies and banks .”
More international investors are adding Africa to their “ must-have ” list . “ The growth of Chinese and Middle Eastern investors into Africa has been well documented , but we are also seeing Indian investment starting to come into the continent ,” George says .
Africa ’ s staying power also is supported by an uptick in investment from within its borders . “ African resources are driving African investment ,” says Joop Demes , CEO of Pam Golding Hospitality and managing director of Pam Golding Hotels , Cape Town . “ Interest from African investors is growing faster than the international investor is reacting . It is from this basis that we see more activity on the continent from African high-net-worth individuals , international development funds and development banks .”
58 HOTELS June 2013 www . hotelsmag . com