Starwood Plans More African Hotels as Travel Demand Rises

Starwood Hotels & Resorts Worldwide Inc. plans to add as many as 20 hotels in Africa over the next four years as the U.S. owner of the Sheraton and St Regis brands takes advantage of rising travel on the continent.

The U.S. company is seeking to add mainly five-star properties to its existing set of 37 hotels, Neil George, senior vice president for acquisitions and development in Africa and the Middle East, said in an interview. Five of the new sites are earmarked for Nigeria, Africa’s biggest economy and most populous nation with about 170 million people.

“We are extremely positive about Africa,” George said yesterday in Johannesburg at the Hotel Investment Conference Africa. “There are massive opportunities there. It’s mostly management contracts. It’s our preferred vehicle for growth.”

International hoteliers are seeking to expand in African countries to exploit an increase in travel and higher economic growth rates than in the U.S. and Europe. Marriott International Inc., the world’s second-largest publicly traded hotel chain, bought Cape Town-based Protea Hospitality Holdings for about $200 million in April.

Taj International Hotels Ltd. plans to have as many as six new hotels in sub-Saharan Africa over the next two years, Michael Pownall, general manager of the company’s Cape Town outlet, said in an interview at the conference. Taj, a unit of India’s Tata Group, is targeting Kenya, Mozambique, Nigeria, Ethiopia and the Democratic Republic of Congo.

Nigeria Popular

“We’d love to get a presence of one or two hotels in each of the targeted countries,” Pownall said. “In Nigeria, we are keen on Lagos and Abuja.”

Nigeria, the continent’s biggest oil producer, is also attractive to Carlson Rezidor Hotel Group. The closely held U.S. operator of the high-end Radisson Blu chain has 30 hotels under development in Africa, with four planned in Nigeria, it said yesterday.

“Nigeria is one of Africa’s powerhouses,” said Andrew McLachlan, Carlson Rezidor’s vice president of business development in Africa. “It is one of the world’s fastest growing economies, and international tourist arrivals are expected to increase by more than 65 percent in the next decade.”

Some African hotels have had double-digit declines in occupancy this year as terrorist attacks and political turmoil have affected markets such as Nigeria and Egypt, Bloomberg Intelligence analysts Margaret Huang and Brian C. Miller said in a note. Even as these factors restricted growth, average revenue per available room in Southern Africa is up 6.7 percent this year to $74, the analysts said.

Stability Assumed

Starwood takes precautions to ensure the safety of staff and guests, and has “a long-term view on destinations” with an expectation that stability will return, Starwood’s George said.

South African revenue per available room is up 7 percent this year as tourist numbers increase, the Bloomberg Intelligence analysts said. A record 9.6 million foreigners visited the country in 2013, up 5 percent from a year earlier, according to the South African Department of Tourism.

Starwood, based in Stamford, Connecticut, has more than 1,200 properties in 100 countries, according to its website. The shares declined 0.6 percent to $82.58 at the close in New York yesterday, valuing the company at $15.7 billion.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE