Protea plans $130m Africa expansion

“There are a number of countries such as Nigeria, Zambia, Uganda and Angola that are flying in the face of the global economic trend as far as hospitality is concerned,” Mr Gillis said.
“Africa’s traditional trading partners have been changing rapidly in recent years, and this is spurring unprecedented growth in regions that have previously not seen the numbers.”

Five of the new hotels will be built in Nigeria, three in Uganda and two in Zambia, the company said in a statement yesterday.
Finding the right site “takes a very long time”, Mr Gillis said, adding that “some of these countries we have been visiting for 10 years, monthly or bi-monthly. You can’t move a hotel once it is built and if you put it in the wrong place you will get egg on your face”.

The W Hospitality Group (WHG), a Lagos-based consultancy specialising in the hospitality industry, said this week that the hotel industry “is betting big on a boom in Africa” over the coming years.

“In total, 208 new hotels with over 38 000 rooms are planned to come to the market in the next five years — 63 hotels with 9 612 rooms this year, 55 hotels with 9 356 rooms next year, 57 hotels with 12 296 rooms in 2014, 30 hotels with 6 060 rooms in 2015 and three with 750 rooms in 2016,” it said.
This projected investment represented “an increase in capacity of 30 percent over the existing base,” WHG said.

Protea’s bias towards Nigeria, with a population of 151 million, is reflected by other hotel groups investing in the continent. Next is Morocco, then Egypt, with 35 new hotels and 19 new hotels respectively, it said.

Most of the money being invested in Protea’s new properties comes from property developers, Mr Gillis said. Protea will brand the hotels and manage them in return for a management fee and, in most cases, an additional incentive fee, he said.

“The investment we make in our staff to manage these businesses is huge. That is where we spend the money. Investing in bricks and mortar beyond the borders of SA is very difficult.”

Commenting on potential acquisitions in South Africa, Mr Gillis said consolidation opportunities were being pursued, but were taking longer than expected. — Businessday.