The recently held Africa Hotel Investment Forum attracted scores of specialists in the hotel and tourism sector to the Kigali Convention Centre. Yet when it comes to experience in and with Africa, few could probably match Andrew McLachlan, Senior Vice-President for Business Development in Africa and the Indian Ocean at Carlson Rezidor Hotel Group, owner of the Radisson Blu and Park Inn by Radisson brand.
Hope Magazine had the opportunity to sit down with the South-African, who has more than 25 years of experience in the hotel sector in Africa, and who today is still based in his native country at Carlson Rezidor Hotel Group’s Africa Area Support Office in Cape Town.
Carlson Rezidor recently launched ‘Destination 2022,’ a five-year global expansion drive that also aims to significantly grow your portfolio in Africa. Can you briefly explain the group’s plans for Africa under this program?
What we’re mapping out in Destination 2022 is how we want to accelerate our growth and our portfolio in Africa over a period of 5 years.
In Africa, between 2014 and now, we have got very accelerated growth; we’ve opened a new hotel every 60 days on the continent, and we’ve signed a new hotel deal every 37 days. Today we have a portfolio of 80 hotels, and 17,000 rooms, and by the end of 2022, we want 125 hotels and 23,000 bedrooms.
To do that, we’ve identified 12 Tier-1 cities – where we think we can have multiple hotels in the same city – and 17 proactive cities. We have also started to create business routes within economic communities; take the East African Community: a businessman who is leaving Nairobi, will most often be going to Kigali or Dar-es-Salaam.
So we look at business travel and airlift within a community, and make sure that we provide the correct hotels and locations. In Africa, there are 16 economic communities, and we’re focussing on three: the East African Community, the Southern Africa Development Community (SADC ) and the Economic Community for West Africa (Ecowas).
And we want to create such business circuits both within the Radisson Blu and the Park Inn by Radisson brands. We really want to focus on these two core brands, and only develop Radisson Red in very selected locations because it’s a lifestyle brand, it cannot go in as many locations as Radisson Blu and Park Inn – only 30 days ago, we opened the very first Radisson Red in Cape Town, South Africa.
Early next year, we’re going to bring another brand to Africa, but I can’t tell you which one as we want to launch it globally at the same time.
What are Carlson Rezidor’s key countries in Africa and why?
If we look at key countries, South Africa is our most important market in Africa, purely because we think we can have the most scale there. Today we have 14 hotels in South Africa, 12 which are open and 2 under development. In Destination 2022, we want to add another 8 hotels.
In East Africa, we’ve identified Ethiopia and Kenya as proactive markets. If we look at Ethiopia, it’s got the fastest GDP growth in Africa and a population of over 100 million people, and we think that we can have scale there. We have 4 hotels in Ethiopia today, 1 which is open and 3 under development – we actually announced 2 hotels in Ethiopia during the Africa Hotel Investment Forum here in Kigali: a Radisson Blu in Bishoftu and a Park Inn by Radisson in Addis Ababa. We want to add another 4 hotels, so we aim to have 8 in Ethiopia by 2022.
Kenya is a similar story. We have 3 hotels in Nairobi today – 1 Park Inn and 1 Radisson Blu which are operational, and we’ll open our first Radisson Blu Residence, which is an extended-stay product, in late 2018/early 2019. We want to add another 4 hotels to Kenya within our Destination 2022 strategy.
In West Africa, Nigeria is a very important one for us – it’s a huge market of 180 million people, and even though it has had a tough three years economically, it has long-term sustainability. Today we’ve got 8 hotels in Nigeria – 2 open and 6 under development – and we want to add another 8 in the next five years.
Ivory Coast is a good market for us as well. We want to be in Abidjan, but also elsewhere to make sure we actually have more than one market.
Why did you opt for the Radison Blu and Park Inn by Radisson brands in Africa?
Radisson Blu is our best known brand, it’s what we call the heavy-weight boxer. When we come into a new country, it’s always first with Radisson Blu; it’s our strongest brand, so we’ll be able to fight for market share no matter who is already in the market, and we should be able to retain our share against whichever competitor follows us in that market.
Once we have a Radisson Blu established, we normally follow it with a Park Inn by Radisson.
The difference between the two is the quality and size of the hotels: a Radisson Blu in Africa is a 5-star hotel, and a Park Inn by Radisson is typically 3 stars. It’s a little bit like an airplane having business class and economy class, it’s the same approach.
We find that we’d rather come into a new country with a Radisson Blu so we can have a more senior management team as it’s a bigger property; and once we’re established and bring in a Park Inn, we don’t have that same level of investment as when you would have brought it in first.
We did this in Rwanda: we first came with a Radisson Blu in July 2016, and then we followed it with a Park Inn in May of 2017. In Nairobi we did the same thing. That’s typically the approach because then we make sure that we’re in two price points in the marketplace.
No, not at the moment. In Rwanda over the last 36 months, a lot of new hotels have been coming into the market like CityBlue, ourselves, Marriott, Ubumwe Grande Hotel which is now going to change to DoubleTree by Hilton... So now, from an economic point of view, the city needs to keep growing, the convention centre needs to establish itself in the marketplace, and airlift needs to improve; so I don’t think there will be too many new hotel rooms being added to Kigali for a long time.
We, at the moment, are quite busy getting our two hotels up and running well. A new hotel normally takes about a 1000 days, or almost four years, to get at a stabilised occupancy, and that’s what we’re focusing on at the moment.
In the context of the ongoing Africa Hotel Investment Forum, how do you see the potential, and near future, of the hotel sector and tourism in Africa? What do you see as the main challenges?
The Africa Hotel Investment Forum is a very important event for the industry in Africa – it’s a once-a-year occasion when all the stakeholders in the hospitality sector can meet: bankers, investors, professionals, architects, designers, hotel groups,... We can actually discuss issues, share lessons learnt, and engage and help grow our business and our industry.
I think in Africa there is still a huge, long-term opportunity. There are still a lot of cities which are under-supplied with quality hotels. The industry continues to grow: new rooms in Africa grew by 13% from last year. Generally, tourism in Africa is growing well because more and more governments recognise it as a very important GDP-contributor. It’s also a very good industry to create a lot of permanent jobs.
So tourism is really growing and has a bright future ahead.
There are some common challenges. Access to funding is always difficult, getting the right amount of equity is always a bit of a challenge. In some markets it’s infrastructure – you need to bring in everything as there’s nothing you can source locally, which makes it expensive to build. Construction skill sets are also a bit of a challenge in some markets.
In some cases, the governments are not so proactive in supporting the development of hotels or the tourism sector. But we also have some countries that are very proactive – they provide tax-breaks, duty-free imports, they accelerate the decision-making when you’re presenting your plans to the municipalities, etc.
Airlifts and visas are always a problem: it would be a lot easier if people could move freely from one country to another, as opposed to having so many visa restrictions. As airlifting accrues, more people can do business and there will be more demand for hotel rooms.
The Rwandan government has taken the option to mainly promote MICE and high-end tourism? How do you assess that choice, and how can Carlson Rezidor contribute to it?
Obviously, we’ve been involved in this hotel and conference centre from the beginning, back in 2009 when it was just a plan on paper. At that stage, the government decided that within East Africa, Rwanda wanted to become a centre for MICE business.
That was the reason for developing such an amazing conference and convention centre, and today it definitely is the best convention centre in East Africa, and probably within the top 3 or 4 best convention centres on the African continent.
And when you have a big convention centre like this, it’s not just beneficial to the Radisson Blu Hotel, it has huge economic value to the entire city – airlines benefit from it, taxis, restaurants, even competing hotels benefit from a convention centre like this. When it’s busy and when it’s full with 2000 delegates, everyone in the city actually benefits from that.
The strategic move for Rwanda to position itself as a luxury destination, I think that’s a smart move – just look at the Seychelles, which also positioned itself as a more exclusive destination rather than a mass market.
You should also consider the assets in the country: visiting the gorillas, for instance, there can only be 8 people per gorilla family for one hour a day – so you’ve got to maximise your revenue and make it more expensive and exclusive. But people in that market are prepared to pay.
So I think it’s the right strategy for Rwanda, and we’re obviously very supportive of that. Going back to the MICE business, the Radisson Blu Hotel works very well with the Kigali Convention Bureau, there’s really a strong strategy on how we will get the convention centre to be busy all the time.
Read this article and more in issue n° 79 of Hope Magazine.