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Africa prospects for tourism industry and investors are highly positive

HVS’ Index: Africa’s growing middle class expected to reach 1.1bn in 50 years – pointing to increased appetite for travel.

Whichever way you look at it, 2015 was a rotten year for Africa’s travel and hospitality industries. Terrorist attacks in North Africa and the Ebola outbreak in West Africa had a strong impact on travel to the continent. South Africa was hit particularly hard, with xenophobia, power outages, prohibitive visa requirements and a fluctuating exchange rate playing havoc with inbound visitor figures.

According to the Tourism Highlights 2016 edition, released by the United Nations World Tourism Organisation in August, international tourist arrivals in Africa are estimated to have decreased by 3% in 2015, earning a mere US$ 33 billion in international tourism receipts to maintain a 5% share in worldwide arrivals and a 3% share in tourism receipts.

Interestingly, none of this has dampened enthusiasm for major investment into the continent’s leisure industries. If anything, the prospects for hoteliers, developers, tour operators and investors are highly positive, says Tim Smith, HSV Managing Partner, who is heading up THINC Africa, HSV’s inaugural Tourism, Hotel Investment, and Networking Conference, in Cape Town on September 6 and 7 2016.

Smith points to the company’s African Hotel Valuation Index, which charts South Africa’s steady recovery despite oversupply (a hangover from hosting the 2010 Fifa World Cup), Ethiopia’s unprecedented growth as an emerging market and the dominance of the Seychelles and Mauritius as tourism hot spots.

While many African countries still have infrastructural and socio-political challenges to overcome, data gatherer STR Global reports that 319 hotels, 60 713 rooms are currentlyunder contract in Africa. This includes 27 790 rooms in 155 hotels under construction, a 35% increase year on year.

HVS’s African Market Hotel Update breaks this down even further, reporting that last year,Accor announced a deal to open 50 hotels in Angola alone; Rezidor started 2016 by announcing the signing of a second Radisson hotel for Addis Ababa; Marriott, having taken Protea Hotels, are now merging Starwood Hotels and Resorts and Hilton, announced several deals throughout the year, including their first Garden Inn properties in Nairobi and Gaborone.

There’s good reason for this optimism: not only is the UNWTO’s tourism outlook positive for Africa in general, and Sub-Saharan Africa in particular, but international tourism now represents 7% of the world’s exports in goods and services, as tourism has grown faster than world trade over the past four years.

According to the UNWTO, tourism ranks third after fuels and chemicals as a worldwide export category, ahead of food and automotive products. What’s more, in many developing countries, tourism ranks as the first export sector.

The African Development Bank has also highlighted another plus for tourism growth on the continent, according to HVS’ Index: Africa’s growing middle class is expected to reach 1.1 billion from 355 million in 50 years – pointing to an increased appetite for travel.“Research shows that the African brand is bigger and better than the US brand – local tops multinationals when it comes to choosing where to stay,” says Smith, adding that this growth in demand from local businesses is changing the operational dynamics of the business.

“The World Economic Forum’s Travel & Tourism Competitiveness Report 2015 ranked South Africa as Sub-Saharan Africa’s ‘most tourism-ready economy’. That score was largely due to our capacity to host major (sporting) events and efforts to reduce red tape and encourage business development in the tourism industry. Other initiatives, like the City of Cape Town’s promotion and implementation of efficient and accountable ICT systems and infrastructure through its ‘Smart Cities’ strategy, has also fostered a developmental environment investors find attractive.

“This however does not mean we can become complacent or have nothing to learn from the rest of the continent, which due to various socio-political and economic constraints has adopted innovative approaches we can still learn from,” says Wesgro Media Relations Officer Colin Wardie. Wesgro is the marketing, investment and trade promotion agency for the Western Cape and a THINC Africa sponsor.

Paul Jingo owner of Jingo Safaris in Kenya, was part of a group that successfully brokered a successful, sustainable relationship between land owners, the Maasai community and the national parks that not only helps conserve wildlife but also bolsters tourism in the region. He says THINC Africa will present an opportunity to “investors with first-hand information of investment opportunities within the continent. In Kenya, for example, we need to invest in more 3-star properties within the countryside – there is a lot of potential in areas away from the major cities that are in need of a good hotel that can serve that special business traveller or a leisure client.” 

Hotelier Lee-Anne Singer, MD for the Singer Group, believes there is definitely room for growth in the industry. “Despite the negative sentiment of late, if you offer travellers the right product, in the right location, mixed with true hospitality and personalised service, the hotel industry is still exciting and lucrative. But across the country, one can find gems and germs.

“There are various sectors of the industry that have lost sight of the reason for being in the hospitality industry: our guests. Managers, supervisors and training institutions should emphasise that people come before systems. Every establishment should be embracing the future and looking at ways to improve on their product and service offering.”

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