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Despit Pandemic, hotel chain grows in Africa

Johannesburg — Africa’s tourism sector has created craters in the face of the coronavirus, but the world’s largest hotel chain continues to work on the continent.

Marriott International MAR’s major hotel chains 0.71%

Radisson Hotel Group and Paris-based Accor,

Alternating current 1.10%

Europe’s largest hotel company says that not only is the African business holding up, but it is determined to keep its footsteps well, even if it is not growing. The two companies consider sub-Saharan Africa to be under-served and underdeveloped in terms of hotels, and predict that once the pandemic subsides, the demand for both business and leisure travel will increase.

“No one says they’re no longer interested in Africa,” said Trevor Ward, owner of W Hospitality Group, an advisory firm based in Lagos, Nigeria that operates throughout Africa. “Long-term play is fine.”

Travel restrictions and social distance have kept long-distance business and leisure travelers home and choked an important source of income for the region. In a baseline scenario, the World Travel and Tourism Council predicts that Africa will lose 10.9 million or 44% of its tourism sector jobs this year and $ 75 billion or 45% of its tourism revenue. On a percentage basis, the decline is worse than in Asia Pacific and the Americas, but not as bad as Europe.

According to hotel chains and analysts, the collapse of many independent hotels by Covid-19 marks a new step in the integration of the accommodation industry, with major chains taking over bad properties and renaming Africa. This has led to a rapid expansion as a whole. This is because there is little risk or cost for a hotel chain to convert an independent property to its own brand, at least compared to building a new property. The refurbished hotel will be part of the chain and will collect franchise fees from the hotel’s revenue.

Conversion trends are seen throughout emerging markets, especially in sub-Saharan Africa, as there are no hotels for business travelers in fast-growing hubs such as Addis Ababa in Ethiopia and Abuja in Nigeria. To be sure, the expansion of the hotel chain is only one part of Africa’s diverse hotel market. From Unguja in Tanzania to the Okavango Delta in Botswana, out-of-city properties in iconic areas are also big hits.

Christopher Nassetta, CEO of Hilton Worldwide Holdings, said Hilton’s 8th, despite an 81% decline in revenue per available room (RevPAR), the hotel’s top key indicator. The monthly earnings announcement called conversion a bright spot for the company. Line performance that combines room rates and occupancy rates during the period.

Andrew McClaklan, managing director of development in sub-Saharan Africa at Hilton, said it is developing 25 operating hotels and 41 hotels in the region. Compared to other parts of the world.

“At this point, we have a very strong trading flow,” said McClaclan. “Some of my colleagues in other markets haven’t seen new trading streams coming in.”

“From a development perspective [the pandemic has] It created a different opportunity than before, “he added.

Patrick Scholes, Managing Director of Accommodation and Leisure Equity Research at Truist Securities in New York, said there is one hotel room for every 92 people in North America, compared to one hotel room for every 1,496 people in the Middle East and Africa. Stated. “There are more open spaces. When it comes to hotel brands, this is the last remaining undeveloped continent,” he said.

By 2025, Marriott plans to add more than 30 properties and 5,000 rooms across sub-Saharan Africa to its current portfolio of more than 100 hotels. Radisson has about 50 hotels in 32 countries in sub-Saharan Africa, with more hotels in Johannesburg and Bamako in Mali by the end of this year, and another 50 in 2021, including 6-8 hotels. We are planning to open a hotel. In countries such as sub-Saharan Africa, Ethiopia, the Ivory Coast and Rwanda, we will open 34 hotels over the next 36 months, adding to our current 70 footprint.

According to Tim Cordon, vice president of the Middle East and Africa region of Radisson, Radisson hotels in Lagos operate at the same occupancy rates as last year for most of the year. These hotels exchanged short-stay corporate travelers for self-quarantine health workers, quarantine arrivals, and oil and gas workers from abroad. According to Cordon, one hotel also has an emergency Covid-19 call center.

“Sub-Saharan Africa is more resilient as a trading destination than Europe,” Cordon said. “Don’t get me wrong, it’s still terrible, but it has reduced our losses.”

Bright aside, the region is still suffering alongside other global hotel industries. According to data and analytics firm STR, occupancy rates in southern Africa from January to August were 32%, compared to 58% in the year-ago quarter. RevPAR was only $ 34.28 in the first eight months of the year, compared to $ 69.07 for the equivalent period in 2019.

“I think sub-Saharan Africa is average when it comes to RevPAR reductions,” said Srdjan Milekovic, who oversees the operation of Hyatt hotels in Europe, the Middle East and Africa. “I really don’t expect significant improvements for the rest of the year.”

Mirekovich said the company’s 11 projects in sub-Saharan Africa are on track, but do not expect hotel demand to return to 2019 levels by 2023 or 2024. “The long-term belief in people’s basic need to travel for some reason has not disappeared,” he said.

Write to Alexandra Wexler (alexandra.wexler@wsj.com)

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