As international hotel brands build their presence in Africa, Marriott International is nearing an agreement to acquire the continent's largest native chain, a move that would nearly double its current distribution there.
Several major brands during the past few years have signed projects in key African cities, many of which have a nascent business travel population and few or no hotels under flags familiar to Western travelers. As of the beginning of 2013, international and regional chains had more than 200 hotel projects totaling about 40,000 rooms in the development pipeline, according to W Hospitality Group's 2013 Africa Pipeline Study.
Hilton Worldwide and Carlson Rezidor in particular have "invested heavily" in development offices in Africa, the report noted, and the two companies as of the time of the report led in terms of rooms under development. The Hilton flagship brand and Radisson Blu each had 17 African hotels under development at the beginning of the year, about three-quarters of which were in some stage of actual construction.
Development particularly has blossomed in Sub-Saharan Africa. Of the hotels under development, 130 projects—about 21,000 rooms—were in the region, compared with 77—almost 19,000 rooms—in North Africa. The Sub-Saharan pipeline was up 23 percent year over year, while the North African pipeline was up 9 percent, according to the report.
Deals have continued to roll in this year. Just last month, Starwood's Sheraton brand announced agreements to build the first internationally branded hotels in Juba, South Sudan, and Nouakchott, Mauritania, as well as a hotel in Conakry, Guinea. Sheraton also has properties under development in Dakar, Senegal; Annaba, Algeria; and Tripoli, Libya. Including those projects, Starwood plans to open 15 new hotels in Africa during the next five years, increasing its current portfolio by 30 percent.
Midprice hotel chains also are looking for opportunities in the region. Best Western International this summer added three hotels in Nigeria and Ghana and has five hotels under development in West Africa.
Marriott International last month announced a move that would leapfrog it past its competitors in the region: a pending agreement to acquire South Africa-based Protea Hotels. Marriott has signed a letter of intent with Protea Hospitality Holdings to acquire Protea's three brands, totaling 116 hotels with 10,184 rooms. Eighty of those hotels are in South Africa, with the rest in Malawi, Namibia, Nigeria, Tanzania, Uganda and Zambia. The combined portfolio and pipeline of Marriott and Protea—which consists largely of the upper-tier Protea Hotels brand, along with two hotels under the lifestyle Protea Hotel Fire & Ice brand and 10 under the luxury African Pride Hotels brand—would give Marriott the largest presence in Africa of any hotel company, according to the company, which plans to maintain Protea's existing brands.
Marriott and Protea expect a definitive agreement to be signed by year-end and the transaction to close in early 2014. Terms of the deal were not disclosed.
Speaking in November at an event in New York for Marriott's Autograph brand, Marriott CEO Arne Sorenson called Africa one of the "world's great development areas" for hoteliers.
"For the first time since independence swept Africa 50 years ago, we're seeing good governments in a number of places, we're seeing economies grow and we're seeing the size of the middle class grow," he said. "We're excited about getting much more broadly into Africa in one fell swoop."
Marriott also plans to continue building its own brands in Africa. Sorenson said the company's been working on about a dozen deals, including hotels scheduled to open in Ghana and Rwanda late next year.
Despite the growing pipelines, building hotels in the region continues to present challenges, according to Marriott International president for the Middle East and Africa Alex Kyriakidis. "The development cycle for opening new hotels in Africa is typically long, due to the challenges posed by emerging infrastructure," he said in a statement.
Even so, W Hospitality Group's reported ground-up development is poised to continue, with "five hotel funds currently active in Africa and others being established, seeking acquisition and new-build opportunities. In addition, several international construction companies from Europe, the Middle East and elsewhere are eying the market, bringing construction finance with them."
