AFRICANGLOBE – Marriott International is betting on Africa in a big way.
The hotel giant announced yesterday that it is planning to buy Protea Hospitality Holdings of Cape Town, South Africa. Protea operates 116 hotels with 10,184 rooms in South Africa, Malawi, Namibia, Nigeria, Tanzania, Uganda and Zambia.
The deal, reported to be worth $200 million, would double Marriott’s presence in Africa to more than 23,000 rooms.
Marriott CEO, Arne Sorenson, is betting on a growing emerging middle-class in the region.
“Africa has significant untapped potential for travel and tourism, both as a destination and source of new global travelers. The continent’s GDP is anticipated to grow at over five percent annually over the next several years which we expect will raise more people into the emerging middle class,” he said in a statement.
Africa’s economic growth of around 5.8% is second only to developing Asia, according to the IMF .
While hotel investors are confident in Africa’s potential for growth the logistics of building there are not so clear.
At a hotel conference recently, Jean-Marc Grosfort, chief development officer for Middle East & Africa at Marriott noted the difficulties saying 50% of projects face delays of over a year.
“Many owners have no clue what a hotel actually entails. You need a lot of cash to start with, and they don’t understand you need a proper project management team in place. It is a bit like schooling them, a difficult learning experience, but there are lot of excited investors,” he added.
That’s one reason Marriott is going in and picking up one of the biggest hotel operators in Africa today; it would take years for it to build what it is now acquiring in its deal with Protea.
Marriott says it expects to close the deal in the first quarter of 2014.
By: Halah Touryalai