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The Interface between Foreign, Local Hotel Chains in Africa – Eandel

The Interface between Foreign, Local Hotel Chains in Africa

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In recent times, most African cities have attracted the entry and expansion of both international and regional hotel chains across the continent. Experts have attributed the growth to the fact that the continent, in the past two decades has been one of the most rapidly expanding regions of the global tourism industry.

Within this period, international brands like Accor, Starwood, and Hilton seem to be the leading hotel chains in terms of operations across different African countries.   Experts have however, pointed out that South Africa based Protea, and Tsogo Sun remain the largest operators in terms of total numbers of hotels.

Beyond large operations, Nigeria, South Africa, Egypt and Morocco seem to be at the forefront when it comes to largest clusters of hotel in terms of spatial distribution.

Other hotel brands that have spread widely across the African continent include: Radisson, Best Western, Intercontinental, Holiday Inn, Marriott, Golden Tulip and Hyatt amongst others. 

Overall, it is evident that the largest clusters of hotel chains are situated in South Africa which can be explained by the dense network of hotels which have been established across the country by the leading South African chains of Protea, Tsogo Sun, Sun International, Three Cities and City Lodge.

Following the rapid expansion of the African tourism industry, most operators in the tourism and hospitality sector find the continent as a safe haven for investments.   Researches have also shown that over the past two decades in particular the expansion rates of tourism in Africa have outpaced that of other regions of the global tourism economy.  

With its rise in importance within the global tourism economy Africa has begun to attract  the attention of international hotel chain developers.   Consequently, there has been a growing competition by international and Africa-based hotel groups.  

In her own views, Group General Manager of Fahrenheit Hospitality Limited., Ada Nwobu said most hotels in Africa are trying their best.

Nwobu who said that foreign brands may not necessarily be a threat to the local ones pointed out that most indigenous hotels face a lot of challenges due to the environment where they operate.

 She said “the hospitality business is actually ubiquitous in the sense that we have a number of aspects that make up the hospitality as a whole. We have the, restaurant, bars, lounge, and of course, the hotels. When you talk about hotels, we are thinking of provisions of accommodation, food and beverage, parties, and halls. So, they vary and a number of things make up hospitality as a whole”

 “If I should make my assertion about the industry, I should say that I would work with three main factors which include:  size, structure and classification of the business. The way a 100-bedroom hotel would run is different from the way a 30 or 20-bedroom hotel would run. We also have the classification; that is hotel category, where we have the 5 stars, 4 stars 3 stars and others. We also have the 2 diamond and all that. So they vary”, she added.

 The hotel management expert said that European countries and the Arab countries are doing very well because they get the right supports from their governments.  She however, pointed out that even some African countries like South Africa, Kenya, Tanzania, , Mauritius and Gambia are strong in hospitality, adding that Nigeria can only do well if the government fills that vacuum, regarding funds,  

On funding, Nwobu said “this is Fahrenheit Hospitality for instance; This Maison is one of the properties we manage. I know we are running a facility with one of the banks. Candidly, the interest charges are ripping us off. You are making money but you take all the money to invest back to the banks because the interest rates are too high. We are not getting any support from the banking sector”. 

Explaining more of their challenges, she said “some of our major challenges are poor infrastructure, power. We struggle with power to run the business. We are always purchasing diesel endlessly. So, we can’t really boast of a 24 hours light system. 80 per cent of the power source are from us as we run on diesel. I think that is why. We also have the issue of infrastructure and maintenance. We have many massive hotels in the country but they cannot be maintained”. 

 Nwobu’s submission is in consonance with a recent research done by Jumia Travels to determine how does the introduction of international hotel chains bring collapse or competition for the local hotel businesses.   

According to Jumia, the introduction of major international hotel brands or chains like Hilton, Marriott, Kempinski and Movenpick instantly causes a certain level of trembling among local brands; most of which may not have the power to compete. However, with high technology and exquisite decor, facilities and services; come high rates.  

Comparably, Jumia noted that, as the international chains charge exorbitant rates in foreign currency, many luxurious local brands provide an alternative for those who cannot afford the luxury of spending several thousands of dollars on a night’s stay.   “This is a great benefit for the local brands as many local travellers as well as middle to low income international travellers will prefer to stay in a good hotel with an affordable price, rather than stay in a fancy hotel for a very high price. The local businesses win here”, Jumia observed. 

“What this also means is that, very high standards are set by these international brands and the local brands are obliged to step up a gear or two to be able to compete at the highest level. Where there is no competition, many of the bigger local entities enjoy monopoly over the relatively smaller hotels in terms of size, quality of service and facilities. Standards are not really adhered to the fullest and everything seems okay”. 

“Immediately there is an introduction of one or two international brands, standards are set very high and the local brands need to upgrade to match up and be able to compete for the very few valuable customers. Facilities are then upgraded to meet modern international technological standards. Staff are also trained to become professionally equipped to handle international clients to their satisfaction. This is good for the industry in general”, Jumia pointed out.

Encouraging the interface between international hotel brands and local ones in Africa, Travels and Tours expert, Mohammed Abdullahi said that the continuous influx of international hotel brands into Africa is a positive growth to the industry. 

Aside creating more jobs for Africans in the hospitality sector, Abdullahi hinted that it also helps in training Africans to imbibe international standards in the industry, adding that competition  is very healthy for the industry to grow and serve customers with exceptional options to choose from.

“The international hotel brands challenges the local brands in Africa to up their services and offerings to continue to wow guests. So, it is a positive development to have international hotel brands in the African market”, he added .

To the General Manager of Kardo Hotel and Suites, Adekunle Adebayo, introduction of foreign hotel brands in Africa is never a threat to the existing ones.

Adebayo who emphasised that it can only heat up competition, said such circumstances are good for business growth.

“I do not see it as a threat. It can only help the local ones to buckle up in areas where they are lagging behind. Don’t forget hotels have classes for those who fit in. While the big brands would host big customers the small brands would also cut out their own market share. No matter how you look at it competition is good for business”, the hotel manager said.

 

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