Africa: The Next Big Opportunity?

10 June 2011

Ahead of Hotel Investment Conference Africa in September, Breaking Travel News talks to Jonathan Worsley, chairman of hosts Bench Events, about the immense potential for growth on the continent

When I ask the question “name an emerging economy?”, most people tend to answer with one of the BRICs – Brazil, Russia, India and China. Hardly surprising given that these countries are transforming the balance of global economic power at unprecedented pace.

Fewer people respond with the name of an African country – yet it is the countries that make up the world’s second largest and second most populous continent that are quietly going about their impressive growth.

The numbers speak for themselves, with African GDP growing at almost double the rate of the developed world during the past decade. And if you think African investment is all about tapping into its bountiful natural resources, think again.

African consumer spending is growing, fuelled by a growing middle class with disposable income, and investment in banking, services, consumer goods and telecoms. The same basis for growth in Latin America and Asia.

Economics

Despite the uncertainty surrounding some of its northern countries, Africa is quickly becoming the land of promise because of its potential returns on investment.

Global alternative asset manager the Carlyle Group recently announced that it has established a team to conduct buyout and growth capital investments in Sub-Saharan Africa — the initial target for the new fund is $500million.

According to the African Economic Outlook, most African economies enjoyed impressive growth before the 2009 global recession.

Average annual growth in 2006-08 was hovering around six per cent and GDP per capita growth to almost four per cent. The world economic crisis brought this period of relatively high African growth to a sudden end.

In the meantime, the world economy is recovering again, and Africa is expected to benefit from improved international conditions. Finance experts use the returns achieved by the World Bank’s International Finance Corporation (IFC) as a good guide to what has been possible.

From 2000 to March 2010, the IFC saw a return of almost 22 per cent a year on its African private equity portfolio, higher than for any other emerging markets region.

Example

At the recent The Times CEO Summit Africa, Paul Kagame, president of Rwanda, said he is “convinced that Africa presents the next frontier for business and offers a prize market that every investor should consider”.

Given the trials and tribulations of Rwanda, the president pointed to the country’s new-found political stability and restoration of peace and security as factors that have helped his country post 7.6 per cent economic growth last year.

Rwanda is just one of the many countries across Africa that are helping investors by cutting red tape and promoting the benefits of investment.

The president also highlighted Africa’s growing young population and urban middle class that is fuelling the growth in the consumption of goods and services.

According to Kagame, by 2020 the number of middle-class Africans will have almost doubled, with combined consumer spending of $1.4 trillion.

“There is now sufficient economic and political stability across Africa to inspire investor confidence,” he said.

Hotel Investment Conference Africa

And it is that investor confidence which has enabled us to bring the Hotel Investment Conference Africa (HICA) to Morocco this September.

The speaker line up includes the minister of tourism & handicraft for the Kingdom of Morocco, HE Yassir Zenagui.

“HICA is a ground breaking event for Africa. For Morocco to attract this calibre of conference, will help support and deliver our 2020 vision for tourism in the region,” said the minister.

“For the rest of Africa it will help build a better appreciation of the potential within the continent,”

Recent events in North Africa and the on-going movement of international hotel brands entering Africa as a whole, means there has never been more to talk about at a conference like HICA.

A great line up of speakers will shed light on the way forward in the face of political change, and examine further opportunities throughout the continent. As ever with new markets, knowledge is key to success.

The hotel investment industry is re-adjusting its thinking as to where the key prospects are in the region. Markets such as Libya, which were showing such promise and activity, are no longer feasible for investors in the short-term.

I’ve been in the hotel investment industry for nearly 20 years and I don’t think we have ever seen such a dramatic shift in market sentiment in such a short space of time.

In hotel development offices around the world little pins are being moved around maps. That said, a great deal remains unchanged, with strong prospects for hotel investors within the region – for example, Morocco’s Vision 2020, which includes a multi-billion government plan to double tourist receipts and is backed by three middle eastern sovereign wealth funds.

Of course, the region is also undergoing a lot of political change, and change creates opportunities.

We know investors are taking a ‘wait and see’ approach in some markets, which will also be discussed at HICA.

If you want to get ahead in the market, and in particular in new markets, then it is essential to be fully up-to-date with the latest events and news within the industry. This is especially true of Africa, which still remains relatively unknown in terms of historical investment data and experience – meaning that you must take care when seeking investment advice; not everyone is an “expert”.

There’s a lot of money going into Africa and not everyone knows what to do with it – it’s a challenge getting some “experts” to correctly point to Kenya on a map. Track the right publications, reports and statistics, but also talk to colleagues, experts and competitors at industry events.

Meetings such as HICA provide that opportunity for intelligence gathering, as well as building important networks, comparing and sharing notes, bouncing ideas around and generally finding out what it’s really like on the ground.

HICA will provide the platform in which to debate how developments will affect hotel investors, operators and developers both long- and short-term. Accor, Marriott, Hilton Worldwide, IHG and Rezidor are already locating development personnel in Africa, and further opportunities will undoubtedly emerge — but just where will these be? What will change mean?

And more importantly how does the hotel industry capitalize? Some of the biggest names in the business have agreed to join the conference to explore current opportunities and developments.

Both the local hotel chains as well as international operators moving into the African continent will be present.

Some of the other confirmed speakers include; HE Salaheddine Mezouar, Minister of Finance, Kingdom of Morocco; Souad Benbachir, Partner, Executive Board Member, CFG Group; Nawal Bendefa, Managing Director, Actif Invest; Arthur de Haast, Global Chief Executive Officer, Jones Lang LaSalle Hotels; Tarik Senhaji, Chairman, Moroccan Agency for Tourism Development (SMIT); Yann Caillère, President and Chief Operating Officer, Accor; Ewan Cameron, Chief Executive Officer, Lonrho Hotels; HE Ahmed Réda Chami, Minister of Commerce and Industry, Kingdom of Morocco; Warren Chan, Principal, Potomac Thames LLC; Driss Benhima, Chairman & CEO, Royal Air Maroc; Fouad Chraibi, Chairman, H Partners; Waleed F M- Al Fehaid, Chairman & CEO, Al Ajial Group of Companies & CEO, Morocco-Kuwaiti Development Consortium (CMKD); Michael Cooper, Vice President, Development, Sub Saharan Africa, IHG; Philippe Doizelet, Partner - North Africa, Horwath HTL; Ismail Douiri, Director General, Attijariwafa Bank Group ; HE Karim Ghellab, Minister of Transport and Facilities, Kingdom of Morocco; Gordon Drake, Chief Financial Officer, Kingdom Hotel Investments; Jordi Ferrer, Founding Partner, Tourism & Leisure Advisory Services; Patrick Finn, Senior Director, Acquisitions & Development, Starwood Hotels & Resorts; Patrick Fitzgibbon, SVP Development - Europe & Africa, Hilton Worldwide; Ed Fuller, President, Marriott International; Marc Grosfort, Chief Development Officer - Middle East & Africa, Marriott International; Lars Hansen, Managing Director, Dreams Leisure Angola; Rudi Jagersbacher, Area President, Middle East and Africa, Hilton Worldwide; Christian Karogloanian, Chief Development Officer, Accor; Prof Maggie Kigozi, Executive Director, Uganda Investment Authority; Marie-Beatrice Lallemand, President Directeur General, Mazagan; Chris Luebkeman, Director, Global Foresight + Innovation, ARUP; Mmatsatsi Marobe, Chief Executive Officer, TBSCA; Jalil Mekouar, Managing Director Middle East & Africa, Jones Lang LaSalle Hotels; Muriel Muirden, Vice President, Strategy, WATG; Ahmer Naushad, Vice President, Hospitality Investments, Rani Investment; Peter Norman, Senior Vice President Development & Acquisitions, Hyatt International; Nenad Pacek, Co-Founder, CEEMEA Business Group and President, Global Success Advisors; Paul Pisani, Senior Vice President of Hotel Development, Corinthia Hotels; Thorsten Purkus, Vice President Feasibility and Development Finance EMEA, Hyatt International; Kurt Ritter, President and CEO, The Rezidor Hotel Group; Gillian Saunders, Head of Advisory Services, Grant Thornton Strategic Solutions; David Scowsill, President & CEO, World Travel & Tourism Council; Neil Steffen, Joint Chief Executive Officer, Fly540; Otto J. Stehlik, Chairman, Protea Hotels; Godfrey Tapela, Senior Investment Officer, IFC; Trevor Ward, Managing Director and Founder, W Hospitality Group; Graham Wood, Managing Director, Southern Sun Hotels, Inns & Resorts; Jonathan Worsley, Chairman, Bench Events, Board Director, STR Global; Mark Wynne Smith, Chief Executive Officer, Jones Lang LaSalle Hotels.