Hotel group Hilton is planning a major push into sub-Saharan Africa, which involves the opening of about 100 hotels over five years and includes conversions and new-builds in the mix. Wendy Atkins reports.
Hilton has announced a major investment programme that aims to expand its sub-Saharan African portfolio. The $50m Hilton Africa growth initiative will see the company support the conversion of about 100 hotels across the continent into Hilton-branded properties. First up is the 109-room Amber Hotel in Nairobi, Kenya, which the company is relaunching under the ‘DoubleTree by Hilton’ brand. It has also confirmed that the 153-room Ubumwe Grande Hotel in Rwandan capital Kigali will trade under the same brand when it fully converts in 2018, making it the first Hilton property in the country.
The group has been operating in Africa for more than 50 years and currently has 39 hotels there, with a further 47 in the pipeline. Among these are the Hilton Nairobi Upper Hill, located in Africa’s tallest building and set to open in 2020, and the Hilton Niamey in Niger, which is scheduled for launch in 2019 and will see the company become the first global international hospitality chain operating in the country.
Room for Growth
The company’s expansion plans may sound ambitious, but Patrick Fitzgibbon, senior vice-president, development, for Europe, the Middle East and Africa, is confident they are realistic. He says: “We’re aiming to seek out 100 hotels – roughly 20,000 rooms – over the next five years. When we look at how we’ve grown in other parts of the world on a relative basis, we think this is achievable. And when you look at the size and scale of the continent and the number of countries, we think it’s achievable.
“We’ve had a fairly strong trading portfolio of hotels in Africa over the past 50 years, so people know who Hilton is, but haven’t always understood that they could be working with the Hilton brand, so this focus on growth has certainly started to trigger significantly more interest.
“One of the reasons for the initiative is that we can open hotels more quickly if we can work with existing hotels that are already built, make some refinements to them using technology and perhaps some soft renovations, and make them suitable for travellers looking for a Hilton product.”
The company is not only planning to convert existing hotels but also has new-builds on the agenda, and Mr Fitzgibbon says: “It’s more likely that the majority of new hotels we build across the African continent will be in the mid-market space, because that’s where the biggest growth potential is.”
Hilton started growing its Africa market aggressively about eight years ago. “A few years ago we launched a much more proactive approach to building focused-service, mid-market hotels, in particular the Garden Inn brand,” says Mr Fitzgibbon.
A Modular Concept
The group has begun to use a modular hotel concept, whereby prefabricated units are constructed in China and then fitted together on site to create a unified structure. According to Hilton, this approach is quicker, cheaper and more sustainable than traditional construction methods, allowing for efficiencies in space and design. Hilton has already announced plans to open Africa’s first modular-build hotel, the 280-room Hilton Garden Inn, in Accra Ghana, and has signed deals to add additional Hilton Garden Inns using this method in other markets in the continent.
“The modular concept feels like a good fit in Africa, because in many markets it’s about the availability of both materials and skilled labour to deliver hotels,” says Mr Fitzgibbon.
He adds that there are opportunities on many fronts, saying: “A lot of our growth strategy is around where there is more opportunity for hospitality. Africa still has a shortage of good hospitality hotel rooms. We’re seeing more demand as travel grows.”
Growth in Travel
Mr Fitzgibbon says that the company is seeing continued and sustainable growth in travel, both in international travel into the continent, and also inter-regional and domestic travel. “More and more of the middle class are travelling for both work and leisure. And there’s been a huge increase of travel into Africa from Europe, the US and particularly Asia,” he says. “The Chinese have long been active on the continent, but you’re now seeing not just the business traveller, but a big increase of leisure travel from China.”
Airport accommodation and leisure destinations are other areas where Mr Fitzgibbon expects big opportunities. “There is enormous capacity for growth around international airports. As we’ve seen in the West, airports are real hubs for growth business – and not just leisure travellers. We’ve identified the top 50 airports across the continent and are working actively to look at opportunities within these,” he adds. “There’s also leisure growth around the more natural aspects of Africa, such as those with conservation ranges and safari parks in east, south-west and South Africa. Plus, we’re starting to see the east African seaboard – Tanzania, Zanzibar and the Kenyan coast – recover in terms of beach resorts.
“But if there’s one overriding segment, mid-market hotels in the major gateways are probably the single biggest opportunity across the continent. That’s because of the significant increase of domestic and inter-regional travellers looking for appropriately priced accommodation.”
Mr Fitzgibbon concludes that Africa is one of the most exciting continents in the world from a hotel growth perspective, and is still in its infancy. “If people are looking for ‘hockey stick’ growth, they’re not looking in the right market. But if they’re looking at long-term, sustainable growth, that’s exactly what we expect to see in Africa,” he says.