Increasing appetite for Angola’s hospitality industry. But will it last?
Accor Hotels, the fourth largest hotel chain in the world has announced that it will build 50 hotels in Angola in the next 2 years. The company has already signed up deals with Angola Insurance and Investment AAA Activos to open the hotels.
The hotel chain has been very successful in Europe where most of its revenue comes from. In 2014, the company had revenues of €5.45 billion with a profit of €578 million. It employs more than 180,000 people globally.
The company will also set more hotels in other African countries in a bid to increase its revenues. Today, the hotel chain is present in 18 African countries with more than 10,000 employees. It has operated in Africa for the past 40 years.
Making the announcement, the company’s CEO, Sebastian Bezel noted that Angola was the next frontier in the African economy based on its economic growth, governance and tourism.
The company has more than 15 brands which target different segments of the market. Some of the brands include: Grand Mercure, Mama Shelter, Pullman, and Adagio among others.
The new push to Africa comes at a time when many investors and tourists are shying away from Africa. In 2014, most tourists cancelled their trips to Africa because of the Ebola issue. In addition, terror activities have hindered the growth of the country.
Angola has remained safe despite all the challenges and has continued to experience rapid growth in terms of tourism. According to the World Bank, the country received 650,000 tourists in 2014. The Angolan tourism agency has been engaging in tourism promotions in a bid to increase the number of visitors.
Hospitality appetite in Africa
Accor Hotels is not the only hotel aiming to make money in Africa. Later this year, Starbucks, will launch its first stores in South Africa in partnership with Taste Holdings. In Uganda, global brands such as Sheraton have already established shop. In Kenya, Kempiski, Radisson Blue, Hilton, Intercontinental Hotels and Serena have all established brands. In Nigeria, Radisson Blue, Sheraton, Wheatbaker, Swiss International Mabisel and Federal Palace have already established shops.
In Angola, a number of international brands have already established. Some of them include: Holidya Inn, Red Roof, Hilton and Intercontinental.
While all this is happening, analysts are raising concerns with the current state of the African market. In Kenya for instance, many hotels are facing a challenge of revenue growth. In fact, many of them have resulted to retrenching staff to reduce the costs.
A good example is the Boma hotel which is owned by the Kenyan Red Cross. The hotel is currently facing major challenges and is actually considering receivership because of the reduced numbers of visitors. At the Coast, hotels and other hospitality facilities have remained shut as a result of the increasing terror threat.
In Nigeria, hotels such as Sheraton have fired staff and reduced their salaries because of the increasing costs and reduced revenues because of the terrorism threat.
In other countries such as Ethiopia, hotel owners have reported increased profits in the last 2 years as investors and tourists increase in the country.
Angola is currently banking on agriculture and tourism to grow its economy. This diversification will help the country be at a better financial position in the face of falling oil prices. The government has already slashed $14 billion in the budget because of the falling prices.