Demand for hotels on the continent continues to grow and technology is helping to level the playing field. Pamela Whitby takes a look

From Cape Town to Nairobi, Lagos to Kigali, Kampala to Addis Ababa, demand for hotels in sub-Saharan Africa is growing. So says JLL Hotels & Hospitality Group, which is forecasting growth rates of 5% a year between 2015 and 2017.

Better fiscal management and governance in some sub-Saharan countries, a rising middle class, youthful population and increased tourism are among the reasons cited for this upward trend.

Having said that, data is hard to come by in Africa. To highlight the point, in releasing its report which points to a fall in international tourist arrivals to Africa in 2015, the UN World Tourism Organisation warns readers that for this reason its “figures [on Africa] should be interpreted with caution”.  

Still hotels aplenty are being built, particularly in East Africa where the market is relatively mature, says Xander Nijnens, Senior Vice President of JLL Hotels & Hospitality Group. The main focus here is in investment into capital and prime commercial cities with global brands having pipelines throughout the region.  

Kenya is a particularly hot spot. Although the UN World Trade Organisation expects international visits to Africa to dip in 2015, in this East African nation that’s not the case; here there is growing demand for hotels. W Hospitality Group reports that eight international hotel chains plan to open shop in Kenya before the year is out. That’s been driven by rising visitor numbers which according to the country’s National Bureau of Statistics expects to rise from 1.9 million in 2012 to 2.4 million in 2017.

The powers-that-be cite the benefits of global interest in the hotel sector as greater international visibility and credibility, better quality hotel supply and broader distribution of product through the numerous channels of the global brands. Others may argue that this is another case of global brands stealing a march on emerging markets and not always to the benefit of locals. However, many of the big brands, like Marriott, the largest international hotel operator in Africa after its acquisition of South Africa’s Protea Hotels in 2014, have put corporate social responsibility at the heart of its development programmes. Now it's up to African governments to be vigilant in monitoring development in order to ensure employment and skills transfer for the continent’s youthful population.

Welcome news

Bruce Tapping, founder and chief executive of Africabookings.com, an African born hotel OTA, which is looking to gain inventory across the continent, sees the rising noise around hotel development as “welcome news”.

Of course there are risks, not least high development costs, which can result in seemingly extortionate room rates. With growing competition, however, hotels in Africa will not only need to tackle this issue of pricing, but also to invest more in brand equity and their owned distribution channels, while ensuring they have relevant products to deliver to customers.

Speaking of relevant product, take Marriott. It recently forged a partnership with local Sunshine Business to open Africa’s first Marriott Executive Apartments in Ethiopia capital city. The target audience: business travellers and families, where demand is growing apace.

Of the deal, Alex Kyriakidis, President and Managing Director Marriott International Middle East and Africa, has said that this the latest in a series of important landmark hotel signings and openings made in Africa, a continent which the chain views as crucial to its global growth strategy. 

Levelling the playing field with technology

Once the hotels are up and running, one of the things that has held them back is patchy internet penetration. But that is changing, says Nijnens, and it is helping to level the playing field.

Interestingly Facebook is partnering with France-based Eutelsat Communications to bring mobile internet access to 14 African countries. With just over 120 million users in Africa in June 2015, on a continent with a population of over a billion, the social network has a clear interest in getting Africa online. It sees the opportunity for growth in advertising revenues – and travel is a big driver for Facebook here - hence the opening of an advertising sales office in Johannesburg!

Broader internet penetration is good news for hotels, particularly the independents and smaller chains. Typically, internet penetration reservation and distribution channels have been dominated by large hotel groups on the continent, but online distribution helps to level that playing field.

That leads to greater competition that Tapping is, pardon the pun, hoping to tap. He sees there is a two-fold opportunity to:

• Educate and guide hotels and lodges about how to correctly make their inventory available across all relevant channels and to do this in a coordinated fashion
• Directly source relevant distribution channels across the globe and provide them with new and accurate inventory for the entire African continent 

According to Tapping, this could help to deliver economies of scale for both hotels looking to increase their reach, as well as distribution channels seeking African inventory.

Since data is a commodity, the ability to access hotel pricing data is another real opportunity on the road to road to conquering Africa. That’s part 2 for Africabookings.com and will kick off once the firm starts rolling out its new technology to its hotel partners (so far it has 500) in the New Year. Watch this space.