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HILTON LEADS RUSH TO AFRICA IN FASTEST BOOM

Marriott International Inc. (MAR), Starwood Hotels & Resorts Worldwide Inc. (HOT) and Hilton Worldwide Inc. are turning to Africa, where a growing middle class and rising travel are fueling the fastest pace of hotel development in the world. Marriott has increased the number of hotel rooms it plans on the continent by 55 percent from last year. For Starwood, revenue per available room in Africa and the Middle East is the highest of any region worldwide. The high-end Transcorp Hilton Abuja, in Nigeria’s capital, commands some of the steepest management fees in the world for its operator, according to Lagos, Nigeria-based hotel-consulting firm W Hospitality Group.

Hotel investors and operators, finding growth slowing in mature European and U.S. markets, are expanding in Africa as the continent is buoyed by increasing trade with countries including China and rising demand for services such as lodging. More than half of Africa’s countries probably will post gross domestic product growth of 5 percent annually through 2016, Economist Intelligence Unit Ltd. said. “Africa’s middle class is almost as large as the entire populations of Russia and Brazil combined,” Hassan Ahdab, Starwood’s regional vice president for the African and Indian Ocean region, said in an e-mail. “The boom in sub-Saharan Africa is attracting business talent from the rich world.” The sub-Saharan region includes Kenya and Tanzania in the east, Nigeria in the west, Angola in the southwest, and South Africa and Botswana in the south.

Young Population
Urbanization in Africa is being driven by one of the world’s youngest populations, said Trevor Ward, principal at W Hospitality, citing data from the International Monetary Fund. People of working age moving to cities has resulted in 40 percent of Africa’s population living in urban centers today, compared with 30 percent in India, he said. The median age in Ethiopia and Nigeria is 18, compared with 37 in the U.S. and almost 46 in Japan and Germany, according to the Central Intelligence Agency’s World Factbook. Forty-nine African cities have populations of more than 1 million, with five of those home to more than 7 million, according to a 2012 study by London-based research firm Economist Intelligence.

Those demographic trends, combined with rising exports of oil and minerals from such countries as Nigeria and Angola, are lifting domestic and international business demand for lodging, according to Ahdab.

“Business schools, including the London Business School, are now getting in on the game and offering Africa-specific seminars, training and clubs,” he said. “For many of these business students, Africa is like India and China 10 years ago.”

Outperforming Asia
Growth on the continent is most dramatic in sub-Saharan Africa. Planned developments, which include new properties by luxury-hotel operator Kempinski in Nairobi, Kenya, are up 23 percent from last year by number of rooms, compared with a 9 percent increase in North Africa, which is a bigger, more mature lodging market with such tourist draws as Morocco and Egypt, Ward said. In the Asia-Pacific region, planned hotels are up 8.5 percent, while in Europe the increase is 4 percent, according to Hendersonville, Tennessee-based research company STR.


Rising numbers of leisure travelers from abroad to eastern and southern Africa also are boosting demand for hotel rooms. In Rwanda, tourism income probably will grow to $440 million in 2014 from a projected $317 million this year, the Rwanda Development Board said in May.

- Bloomberg

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