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'All Eyes on Africa' Guy Wilkinson presentation Hotel Show 28 09 13

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Presentation on the exciting prospects for the African hotel market, given on 28 09 13 at the Hotel Show's Vision Conference in Dubai. Covers demand drivers, existing supply and future pipeline, case studies of 'hot market' cities. African economic performance is much better than Europe's! Hotels are undersupplied! You should be there now!

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'All Eyes on Africa' Guy Wilkinson presentation Hotel Show 28 09 13

  1. 1. www.viability.ae…when diligence is due Vision Conference 2013 Keynote Presentation: All Eyes on Africa The Hotel Show, 30th September, Dubai World Trade Centre
  2. 2. www.viability.ae…when diligence is due Viability Management Consultants • Hospitality and real estate development consultancy • Established in 2006 • Principals have consulted in every country in the Middle East except Iraq, as well as many in Africa • Specialized in providing: – Bankable market & financial feasibility studies – Market studies in a variety of hospitality-related sectors – Operator selection and contract negotiations – Operational reviews and interim management solutions • Reputation for detailed work; high-quality, well-reasoned, realistic advice “Truly an expert consulting company.” “…a most valuable contribution to our knowledge base.” “All responses from Viability were exceptionally prompt and pertinent.”
  3. 3. www.viability.ae…when diligence is due IMF World GDP Growth Forecast Map, 2013 (%)
  4. 4. www.viability.ae…when diligence is due Sept/Oct 2013
  5. 5. www.viability.ae…when diligence is due UNWTO World Tourist Arrivals & Revenues, 2012 • >1 billion tourists worldwide in 2012 • Asia & Pacific arrivals up 7% followed by Africa (+6%) & the Americas (+5%)
  6. 6. www.viability.ae…when diligence is due “10 years is a Long Time in Africa” Other indicators: • 2008 - $860 billion spent on goods & services (India $635 Billion) • 2020 - $1.4 trillion on goods & services • 10% of oil reserves • 40% of gold • 95% of platinum • 60% of world‟s available, unexploited crop land • Agricultural output set to triple in 20 years • 2015 – 100 million households will have discretionary income • 316 million cell phone users • 700 million active SIM cards • 22 nations with 400 m population of „middle income‟ status; 10/ /200 m more by 2025 PRE 2000 • 16 wars • 8 democratic elections • 2% GDP growth • 300 publicly listed companies • 10 companies with revenue >$1 billion • $15 billion capital inflows NOW • Somalia/Sudan at war • 36 democratic elections • 5.5% GDP growth • 1,400 publicly-listed companies • 100 companies with revenue >$1 billion • $87 billion capital inflows
  7. 7. www.viability.ae…when diligence is due World Bank Africa’s Pulse April 2013 Highlights • In 2012, a quarter of African national GDPs grew at 7% or higher • Sierra Leone, Niger, Cote d‟Ivoire, Liberia, Ethiopia, Burkina Faso & Rwanda are among the fastest growing economies in the world • Net private capital flows to Africa grew 3.3% to a record $54.5 billion • FDI inflows to Africa increased by 5.5% in 2012 to $37.7 billion • Medium-term growth prospects remain strong thanks to: – a gradually improving world economy – sustained consumer spending, accounting for >60% of Africa’s GDP – consistently high commodity prices, coupled with discoveries of oil, gas, copper & other minerals and the expansion of mining (by 2020, only 4 or 5 African countries will not be involved in mineral exploitation) – more investment in regional infrastructure, trade & business growth – better political and economic governance – declining inflation, which fell from 9.5% in 01/12 to 7.6% in 12/12 – improved access to credit with lower interest rates – a rebound in agricultural incomes, thanks to better weather (Sahel, Horn of Africa), but… “Resource-rich African countries will consciously need to invest these new earnings in better health, education and jobs, and less poverty for their people in order to maximize their national development prospects.”
  8. 8. www.viability.ae…when diligence is due Hotel Supply & Brand Penetration in Africa No Branded Supply 1. Angola 2. Burundi 3. Central African Republic 4. Comoros 5. Democratic Republic of Congo 6. Eritrea 7. Liberia 8. Mauritania 9. Niger 10. Republic of Congo 11. Sierra Leone 12. Somalia 13. South Sudan One African Branded Hotel 1. Burkina Faso 2. Guinea Bissau 3. Lesotho 4. Malawi 5. Rwanda 6. Swaziland • Total supply: 460,000 rooms in 54 countries, including … • 90,000 from 29 chains as per W Hospitality – 48,000 in North Africa‟s 6 countries – 41,000 in SSA‟s 48 countries NAfricaSubSaharanAfrica
  9. 9. www.viability.ae…when diligence is due Actual Performance Key Cities: OCC & ADR – US$ - YTD 2013 $ 0 $ 50 $ 100 $ 150 $ 200 $ 250 $ 300 0% 10% 20% 30% 40% 50% 60% 70% 80% Occupancy ADR (US$) Note: STR tracks 650 African hotels - 120,000 rooms
  10. 10. www.viability.ae…when diligence is due Lagos second globally in terms of ADR… YTD 2013 - ADR – US$ 121 153 199 277 343 0 50 100 150 200 250 300 350
  11. 11. www.viability.ae…when diligence is due Africa Room Supply/Demand % Change 12-Month Moving Average – YE 2005 to July 2013 -20 -15 -10 -5 0 5 10 15 2005 2006 2007 2008 2009 2010 2011 2012 Supply % Chg Demand % Chg World Cup Effect Arab Spring Arab Spring Rebound Global Financial Crisis
  12. 12. www.viability.ae…when diligence is due Key Countries Performance: YTD 2013, YoY % change, OCC & ADR (local currency) -20% -15% -10% -5% 0% 5% 10% 15% 20% Occupancy ADR
  13. 13. www.viability.ae…when diligence is due Africa Hotel Pipeline – Total Pipeline 2011-2013 Note: Sample survey from March 2013 of 29 chains/59 brands 17,038 17,217 18,782 13,700 17,109 21,052 75 77 7776 100 130 0 20 40 60 80 100 120 140 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 2011 2012 2013 Hotels Rooms SSA Rooms N Africa Rooms N Africa Hotels SSA Hotels
  14. 14. www.viability.ae…when diligence is due Africa Hotel Pipeline – Top 10 Countries by Rooms 7,644 7,470 5,178 3,160 1,469 1,441 1,441 1,359 1,320 1,128 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 Egypt Nigeria Morocco Algeria Kenya Ghana Tunisia Libya South Africa Gabon
  15. 15. www.viability.ae…when diligence is due Africa Hotel Pipeline – Top 10 Cities by Rooms, 2013 vs 2012 Rank City 2013 Total 2012 Total % Change in 2013 Hotels Rooms Hotels Rooms Hotels Rooms 1 Lagos 25 4,080 17 3,415 47% 19% 2 Cairo 8 2,843 12 2,883 -33% -1% 3 Hurghada 5 2,221 2 1,084 150% 105% 4 Abuja 11 1,598 10 1,204 10% 33% 5 Algiers 7 1,528 7 1,486 0% 3% 6 Tangier 7 1,505 5 1,080 40% 39% 7 Nairobi 9 1,437 4 678 125% 112% 8 Casablanca 9 1,344 8 1,063 13% 26% 9 Accra 7 1,291 7 1,262 0% 2% 10 Sharm El Sheikh 2 1,213 2 1,215 0% 0%
  16. 16. www.viability.ae…when diligence is due Africa Hotel Pipeline – Other Cities by Rooms, 2013 vs 2012 Rank City 2013 Total 2012 Total % Change in 2013 Hotels Rooms Hotels Rooms Hotels Rooms 11 Marrakech 6 1,131 10 1,886 -40% -40% 12 Libreville 7 1,128 6 1,024 17% 10% 13 Tripoli 3 1,036 3 1,084 0% -4% 14 Addis Ababa 6 1,019 2 273 200% 273% 15 Marsa Alam 2 838 1 265 100% 216% 16 Luanda 3 764 3 824 0% -7% 17 Rabat 4 732 3 540 33% 36% 18 Conakry 3 659 3 659 0% 0% 19 Dakar 4 659 3 447 33% 47% 20 Cotonou 4 645 3 442 33% 46% Subtotal 132 27,671 111 22,814 19% 21% Others 75 12,163 66 11,512 14% 6% Total 207 39,834 177 34,326 17% 16%
  17. 17. www.viability.ae…when diligence is due Africa Hotel Pipeline – North-South Split of Top 20 Cities SSA 38% NA 62% SSA 33% NA 67%
  18. 18. www.viability.ae…when diligence is due Africa Hotel Pipeline – Top 10 Chains by Rooms 6,230 5,947 5,165 3,900 2,514 2,413 2,290 1,481 1,369 1,355 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Hilton Worldwide Carlson Rezidor Accor Marriott Starwood IHG Louvre Kempinski Mövenpick Rotana
  19. 19. www.viability.ae…when diligence is due Africa Hotel Pipeline – Top 10 Brands by Rooms 5,400 4,191 2,192 1,767 1,676 1,675 1,608 1,481 1,369 1,296 0 1,000 2,000 3,000 4,000 5,000 6,000
  20. 20. www.viability.ae…when diligence is due Mini Case Studies of 4 Hotel „Hot Markets‟ Economic Highlights of Case Study Countries (2012) # City Country Population (m) GDP ($ bn) GDP/capita ($) GDP Growth (%) 1 Nairobi Kenya 43.2 37.3 865 4.4 2 Lagos Nigeria 168.8 262.5 1,555 6.5 3 Luanda Angola 20.8 114.2 5,485 6.8 4 Accra Ghana 25.4 40.7 1,605 7.9 Source: World Bank 1 24 3
  21. 21. www.viability.ae…when diligence is due Hot Market Case Study 1: Nairobi, Kenya • Population >3 million, business hub for East African Community • Considered main alternative location to South Africa for corporations entering Africa • Expanding business infrastructure, highly qualified workforce • Tourism hub for safaris in Masai Mara, Mount Kilimanjaro • Generally ageing hotel stock, but… • Tribe & Sankara are cool boutique hotels – Kempinski & Crowne Plaza just opened • >1,000 pipeline rooms Future Hotel Rooms Year Country Lodge (City Lodge) 84 2013 Dusit D2 Nairobi 197 2013 easyHotel Westlands 90 2013 Radisson Blu Nairobi 244 2014 Park Inn by Radisson Nairobi Westlands 126 2014 Novotel Nairobi 200 2016 Ibis Nairobi 200 2016
  22. 22. www.viability.ae…when diligence is due Hot Market Case Study 2: Luanda, Angola • Population 5 million, ranked most expensive city on earth (Tokyo No 2)! • Capital of Africa‟s No 2. oil producing nation (85% of GDP) – and China‟s top oil supplier - also a gas and diamond producing hub • 27-year civil war ended in 2002, resulting in major reconstruction • High barriers to entry • Hotel undersupply, all hotels owner-operated currently • ADRs of US$250+, small pipeline Future Hotel Rooms Year Radisson Blu Luanda 257 2015 Kempinski Hotel Talatona 250 2015 Pestana Luanda Bay 257 2016
  23. 23. www.viability.ae…when diligence is due Hot Market Case Study 3: Lagos, Nigeria • With Africa‟s largest population (city population, 8 m – Lagos State, 17.5 m)… • Nigeria will soon overtake South Africa as the continent‟s largest economy - and one of world‟s Top 20 economies • Oil (80% of export earnings) and business hub for West Africa • Difficult place to develop hotels - new Intercon took 8 years to open! • Already well served by hotel brands - pipeline of 23 hotels, >3,500 rooms Future Hotel Rooms Year Best Western Premier Starfire 38 2013 Africa Sun Amber Lilygate 74 2013 Mantis The George 64 2013 Tulip Inn Lagos 100 2014 Ramada Lekki Lagos 164 2014 easyHotels Adenyi Jones Avenue 50 2014 easyHotel (Bristol) 80 2014 easyHotel Breadfruit Street 109 2014 Crowne Plaza Lagos Airport 275 2014 Park Inn by Radisson Apapa 125 2015 Lagos Airport 250 2015 Marriott Lagos 150 2015 Holiday Inn Lagos Victoria Island Waterfront 300 2015 Holiday Inn Lagos Airport 300 2015 Golden Tulip Crusader Suites Ikoyi 42 2015 Best Western Premier Georgetown 65 2015 Ibis Apapa 130 2015 Park Inn by Radisson Ikeja 135 2015 Mantis Ikeja Hotel 65 2015 Lagos Ikeja Hilton Garden Inn 120 2016 Luxury Collection Ikoyi 441 2016 Novotel Ikeja 250 2016 Fairmont Lagos 230 2017
  24. 24. www.viability.ae…when diligence is due Hot Market Case Study 4: Accra, Ghana • 4 million population, capital of mineral-rich Ghana (gold, bauxite, phosphates) • Relatively advanced import-substitution industries include electronics manufacturing, car manufacturing • Oil production began in 2010, inspiring an FDI surge • Ghana has attractive beaches too, plus castles, forts, nature reserves • Smattering of global hotel brands • Pipeline of 1,300 rooms Future Hotel Rooms Year Kempinski Hotel Gold Coast City 269 2013 African Sun Amber Accra Airport 201 2013 Tulip Residences Accra 101 2014 Marriott Accra 200 2014 Ibis City Centre 120 2015 Lansmore Accra (Lonrho) 200 2015 Radisson Blu Accra Airport 200 2016
  25. 25. www.viability.ae…when diligence is due Thanks for listening Tel +971 3 344 3734 Fax +971 4 344 0907

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