PRESS RELEASE: Marriott International continues extensive expansion in Africa: Targets over 200 hotels with more than 37,000 rooms by 2022 expecting to generate $8.5 billion of capital investment and 50,000 direct and indirect jobs

Today Announces Seven New Hotels, Marking a Debut in Ivory Coast and Strengthening Presence in Ethiopia, Ghana and Nigeria

KIGALI, Rwanda, October 10, 2017/ — From the Africa Hotel Investment Forum (AHIF) (www.Africa-Conference.com) in Kigali, Rwanda, Marriott International (NASDAQ: MAR) (www.Marriott.com) today announced further expansion plans in Africa with seven new hotel signings. Marriott International was the first global chain to make a significant investment in Africa with the acquisition of Protea Hotels for $210 million in 2014. The company is targeting over 200 hotels with 37,000 rooms open or in the pipeline by 2022, equating to around $8.5 billion of capital investment by its real estate partners, reinforcing its continued commitment to expansion in Africa and solidifying its leadership on the continent. The investment is expected to generate substantial economic activity and around 50,000 direct and indirect jobs once the hotels open.

“Africa today makes a very compelling story. We are seeing unprecedented traction for our compelling brands, driving our momentum of growth,” said Alex Kyriakidis, President and Managing Director, Middle East and Africa, Marriott International. “We have always believed in the potential of Africa and the opportunities the continent has to offer. With economic growth, a rising middle class and rapid urbanization, the demand for travel and high quality lodging is growing, providing us with a significant opportunity to enhance our footprint and play our part in supporting many emerging markets across the continent,” he added.

Today Marriott International hotels are present in 20 African countries: Algeria, Djibouti, Egypt, Ethiopia, Gabon, Ghana, Guinea, Kenya, Malawi, Mauritius, Morocco, Namibia, Nigeria, Rwanda, Seychelles, South Africa, Tanzania, Tunisia, Uganda and Zambia. The company is expected to foray into new markets including Benin, Botswana, Madagascar, Mali, Mauritania, and Senegal and has signed 1300 new rooms marking the debut of Marriott International into Ivory Coast while strengthening its presence in existing markets including Ethiopia, Ghana and Nigeria.

Abidjan Marriott Hotel, Ivory Coast

Within walking distance from the Presidential Palace, the 200 room Abidjan Marriott Hotel is strategically located in the heart of Plateau, the central business district and the commercial, financial and administrative center of Abidjan. Owned by Ivory Coast Investissement, the hotel is slated to open in 2021 and will be part of a mixed-use development that will include a conference center, offices, retail and a national library.

Sheraton Abidjan and Four Points by Sheraton Abidjan, Ivory Coast

Slated to open in 2022, both Sheraton Abidjan and Four Points by Sheraton Abidjan will also be part of a mixed-use development which will include a convention center, a marina, a shopping center and an office building. The 259 room Four Points by Sheraton Abidjan will be a conversion of an existing hotel, which will be rebranded following extensive refurbishment, while the 300 room Sheraton Abidjan will be a new build property. Owned by the Societe Des Lagunes, the hotels will be set on the waterfront in the affluent neighborhood of Cocody, an upmarket residential commune that also houses the embassy district.

With Ivory Coast being celebrated as one of Africa’s fastest-growing economies, and re-emerging as the gateway to Francophone Africa, the new hotels in the capital city of Abidjan are ideally placed for a long and thriving future.

Renaissance Landmark Lagos Hotel and Marriott Executive Apartments, Victoria Island, Lagos, Nigeria

Owned and developed by Landmark Africa Group, Marriott International will manage the 216 room Renaissance Landmark Lagos Hotel, as well as a 44-room Marriott Executive Apartments. Slated to open in 2020, the hotels will be located within the Landmark Village precinct, a premier mixed-use, business, leisure and lifestyle development along the Atlantic Ocean waterfront in Victoria Island, the central business district of Lagos. The 25-floor hotel will offer a wide range of amenities, including local and international restaurants, spa facilities, a fitness center, and an infinity pool with access to a 100-meter-long boardwalk overlooking a vibrant beach club offering exciting watersports.

Speaking on the increased interest in mixed-use development projects, Kyriakidis said, “As cities evolve and grow into flourishing urban centers, we will continue to see a lot of activity in this space. An international hotel brand can bring cachet to a project that positions it significantly above its peers and differentiates it from its competitors. Our compelling brands spanning every segment from Luxury to Premium to Select to Extended Stay, lend themselves to grow in all markets, city and resort as well as standalone and mixed-use formats, providing developers the flexibility and choice to identify the right brand for the right location.”

Le Meridien Accra, Ghana

 

The 160 room Le Meridien Accra, owned by 4-Mac Limited is strategically located close to the international airport, within the prestigious Airport Residential Area of Accra. It will provide easy access to key commercial, diplomatic and government nodes as well as to major city attractions. Scheduled to open in 2021, the hotel marks the debut of Le Meridien brand into Ghana.

Protea Hotel by Marriott Addis Ababa, Ethiopia

Projected to open in 2021, the 165 room Protea Hotel by Marriott Addis Ababa, located on Churchill Avenue will mark the debut of the brand into Ethiopia. The hotel will offer a specialty restaurant, a lobby bar and lounge and meeting facilities as well as a fitness center and spa.

Earlier this year, Marriott International had announced the debut of The Ritz-Carlton brand in the exotic Zanzibar Archipelago with the signing of The Ritz-Carlton Zanzibar, the 90 room all suite and villa luxury resort as well as the debut of Aloft into Mauritius with the signing of Aloft Port Louis, the brand’s first adaptive reuse project in Africa.

Commenting on the extraordinary pace of hotel signings and openings this year, Kyriakidis said, “Signings and openings form the cornerstone of our aggressive growth strategy. Our history and legacy on the continent and the strong foundations we have built over the years serve as a springboard for our future growth. Our brands are resonating with the aspirational and fast growing middle class in the region. Our strengthened footprint and increased distribution is driving market share and building loyalty which makes us more attractive to investors than ever before.”

The company debuted the Four Points brand in Tanzania last week with the opening of Four Points by Sheraton Arusha, The Arusha Hotel and is now gearing up to open the Four Points by Sheraton Dar es Salam, New Africa Hotel. Earlier this year the brand debuted in Kenya with the opening of Four Points by Sheraton Nairobi Hurlingham and is now expected to open its second hotel in Kenya, Four Points by Sheraton Nairobi Airport in the next couple of weeks.

In Egypt, the company recently reopened Sheraton Cairo, a city icon for over four decades, after extensive renovation. It is now looking to debut its renowned luxury brand St. Regis, with the opening of the spectacular St. Regis Cairo, a highly anticipated addition to the company’s luxury portfolio in the country.

Marriott also recently opened Protea by Marriott Owerri Select in Nigeria. Other forthcoming openings over the next couple of months include Sheraton Bamako which marks the debut of Marriott International in Mali, Protea Hotel by Marriott Constantine, the brand’s debut in Algeria and the Accra Marriott Hotel, the debut of the flagship Marriott Hotels brand in Ghana.

Today, Marriott International has a strong footprint across the continent operating 140 hotels with close to 24,000 rooms across 12 brands.

The Tourism Industry and Hotel Development in South Africa

INTRODUCTION

For many years the tourism industry in South Africa was classified as only one of the numerous secondary contributors to the country’s gross domestic product. The primary industries were mining, most especially gold, manufacturing and agriculture among others. However, when gold started losing its shine, in a manner of speaking, other industries started to come to the fore. As one of South Africa’s other exports, like gold, tourism started to raise its hand to also be counted. However, it still did not occupy centre stage. Even after the White Paper on Tourism of 1996 was published, tourism was still accommodated as a Sub-Ministry within the Environment and Tourism Department. Even then, it was still not identified as a main priority.

It was only after visitor numbers to South Africa started to rise phenomenally that the authorities started to take notice. The events which had triggered this phenomenon were the erstwhile but very successful general elections of 1994 and the Rugby World Cup of 1995. South Africa became the place to be! Although it is generally regarded as a long-haul destination, tourists still came flocking in even after the two trigger events had long passed. So, what made these people to come flocking in?

South Africa is attractive to tourists due to its physical beauty as well as its mild weather. Natural disasters are very rare. We have an abundance of mineral resources. We have an open economy, which attracts investment, and with it many immigrants. We also have an open-border system, whereby very many people from the north of the continent arrive in droves as political refugees.

TOURISM DEVELOPMENT

Tourism development involves a broad ownership base which means that many people benefit from the tourism industry. One of the economic sectors that derive tremendous benefit from tourism development is the hospitality sector and by extension hotel properties. Hotel properties must be developed all the time in order to support tourism development. With increased tourism development, broadbased economic development increases, which in turn benefits the broader South African community.

Although the South African government was at the forefront of supporting the country to attain the rights to host the 2010 FIFA World Cup, the State still needs to put more funding into promoting tourism. Our competitors are still directing more funding into promoting their countries. With the spotlight shifting away from South Africa to Brazil as a result of being the next nation to host the World Cup in 2014, we cannot afford to lag behind. We have a great product and the right mix of people and export credentials to compete successfully.

Then there is the image issue we need to think about. Issues that get interpreted as signs of political instability are all over the media. Service delivery strikes, no matter where they originate, have an impact on the image of South Africa. Of course there will always be the extreme tourist; one who will always go political hotspots to derive a thrill. However, the majority of our visitors prefer to come here for the milder attractions we have to offer. Do we report only the good news and hope that continuing to do so will eventually lead the world to believe that we do not have problems? Or do we continue to report the bad news as prominently as we are doing now, and risk perpetuating the old stereotype that the African continent is incapable of looking after itself?

The responsibility of growing the tourism industry lies with the State. The good thing is that the South African government has been at the forefront of developing tourism. From these overtures from government, the private sector can only take the cue and forge ahead with the development of tourist attractions.

HOTEL DEVELOPMENT

The hotel industry in South Africa was catapulted into the high road by Sol Kerzner and the South African Breweries with the establishment of Southern Sun Corporation in the late 1969. Since then, many hotels have been built and renovated many times over. Prior to the recession of 2008-9 FIFA was adamant that South Africa has a shortage of hotel bedrooms for the 2010 World Cup. Well, things have changed very rapidly over the last eighteen months or so. Many hotels were built in the intervening period. Arguably theses were built in order to respond to this shortage as per FIFA. The expected numbers did not arrive to take up the room-nights. We now find ourselves in a situation of an oversupply of hotel room-nights.

The financing of hotels is a very problematic subject. Banks still view hotels with extreme suspicion. The revenues are too volatile, they say. As a result it is not possible to forecast how the loan is going to perform over the period it is extended. On the one hand, if they had a lease from a ‘reputable’ hotel operator, they say, then they would happily extend loans for hotel developments.

On the other hand, hotel operators are generally not willing to enter into leases with the hotel owners, thereby providing guarantees to bondholders that the loan is covered by proper collateral. As a result of this impasse, hotel developments are less prevalent than retail and commercial developments.

There is an old adage in the investment world which says the higher the risk, the higher the return. I know of a company which invests in hotel properties as well as retail and offices properties. Rand for Rand, over many years, the hotel property investments provided the highest return for them. So, even under these depressed trading conditions, they are still investing aggressively in hotel properties.

Two major international hotel groups have recently announced plans to either enter the South African market or to increase their current investment. These companies are Marriott International and the Hilton Group. It is hoped that these new initiatives were triggered by more than just the successful hosting of the FIFA World Cup, but also by something more sustainable than that.

In other parts of the world, real estate investment trusts have been formed specifically for the purposes of investing in hotel properties. This is because of the reluctance of bankers to fund hotel property developments. In South Africa only one Fund has been formed. This is the Hospitality Property Fund. At inception, banks were reluctant to extend lending to this Fund too, due to the underlying asset being hotel property. Such motives of the banks need to be questioned. It is almost an open secret among property practitioners that banks sometimes provide lending to funds that have as an underlying asset properties that they would normally not touch on an individual basis. The latter are characterised by poor valuations, dilapidated properties and bad locations, to name a few.

CONCLUSION

Although this article mentions that South Africa has an oversupply of roomnights, this this phenomenon has not been reported to have been formally established. Operational variables such as low occupancies and revenues and average room rates alone are not enough to use as evidence to arrive at the conclusion that an oversupply definitely does exist. This reported oversupply could be referring to all types of hospitality, thus accounting for bed and breakfast establishments, the latter not being classified as formal hotels. Oversupplied or not, the formal hotel industry needs more hotels to attract tourists.