The East Africa Property Investment Summit was held on the 5th and 6th of April, 2017, at the Radisson Blu Upper Hill, Nairobi. The hotel-focused panel at the conference featured some key speakers from the hotel industry on the continent, namely: Andrew McLachlan, Senior Vice President, Carlson Rezidor Group, South Africa; Lasse Ristolainen, Development Director, Hilton Worldwide, South Africa; Hasnain Noorani, Founder & Group Managing Director, PrideInn, Kenya; and Alexis Janoray, Vice President – Development, AccorHotels, France. The panel was moderated by Mark Dunford, Vice President: Hotels & Hospitality, JLL, Kenya.
Relative to the rest of the sub-Saharan African hotel market, Nairobi is a mature market – in terms of hotel development. There has even been some chatter about the threat of oversupply, but the panel seemed to believe that discussion is moot, particularly because demand expectations are expected to continue to grow to meet supply. Rwanda, however, has been very active in deal signings, and there is a chance that the pace of development might grow faster than demand, which could lead to an oversupply situation.
All of the panelists agreed that there are opportunities in the mid-market hotel segment in the region. Hotel groups had traditionally focused on establishing flagship properties with their upscale and primary hotel brands in major capital cities. However, operators are also seeing the opportunities for midscale brands in primary, and secondary cities as well. Carlson Rezidor is looking to grow its pipeline with its Park Inn by Radisson and Radisson Red brands, along with the flagship Radisson Blu brand. Hilton is particularly looking to grow its Hilton Garden Inn brand, along with its Hilton brand. AccorHotels already operates various brands across the positioning spectrum – from the economy scale Ibis, to the high-end Sofitel. PrideInn is a Kenyan hotel chain that already operates three hotel brands in Nairobi and Mombasa, ranging from luxury to economy.
The markets tend to primarily consist of business travel demand, however Alexis Janory of AccorHotels discussed the growing bleisure travel trends, where business travelers or conference attendees tend to extend the end of their trips to accommodate some leisure activity. The leisure market in Mombasa has taken a hit in recent years due to the increased terrorist activity in the city, but the market is slowly recovering.
There was a discussion about growing the hotel pipeline by signing Management Agreements versus Franchise Agreements in Africa. Lasse Ristolainen said that Hilton was open to signing Franchise Agreements to grow its pipeline quicker, while Janory and McLachlan insisted that their companies only considered development opportunities with Management Agreements, citing the need to adhere to strict brand standards and a lack of skilled third-party hotel managers in the region.