With the saturation of established markets in the Northern Hemisphere, coupled with the economic woes experienced in Europe and the US, global corporates are seeking new markets in which to grow their businesses.
In the past, Africa was sometimes seen as too unstable, too violent and too bureaucratic for the business world, but things have started to shift. Africa has today become a region of increasing popularity among investors the world over.
“This trend is clear within the hospitality industry,” explains Danny Bryer, the director of sales, marketing and revenue management for Protea Hotels by Marriott.
He highlights the significant role that the tourism sector has been playing in economic development on the continent.
“For the past few years, the planned pipeline of new hotels has grown steadily both in the number of hotels and rooms, and in the number of hotel groups entering the sub-Saharan region”.
In its annual survey of the hotel pipeline for 2016, the W Hospitality Group stated: “The evidence from our survey is clear – investors remain confident about the future of the hospitality industry on the continent.” And the potential is certainly strong. With its sizeable and growing population, the region will provide a vast customer base.
Demographic forecasts suggest that, 10 years from now, one in four people on the planet will be African. This growth in numbers is occurring at the same time as an expansion of wealth among private individuals, which is fuelled by economic growth of between 5% and 9% in many countries.
But, as Bryer points out, it is inaccurate to view the region as a monolithic whole. “Tourism has been very successful in some states, but not all.”
In those countries where tourism is doing well, there are certain trends that have contributed to the successes. For instance, travellers’ perceptions relating to stability and security in a country or region is important.
This has been the case in East Africa. Tanzania, for instance, enjoyed a good tourist market in 2016, and this is attributed to peaceful elections in the country and no serious security issues, as well as greater accessibility of flights through increased international routes.
An increase in inbound arrivals of 10.4% for January to October 2016 compared with the same period the previous year reflects the strength of the sector, which was under threat from an introduction of VAT on tourist services. Today, tourism has in fact become the leading sector in Tanzania’s economy. Things are looking positive, too, in Kenya, where tourism took a knock after two serious terror incidents.With domestic tourism on the rise, largely owing to the growth of the Kenyan middle class, and more airline routes to the country, the future looks positive.
New hotels are being opened, and the area is growing its business tourism. This is evidenced by an announcement this month of the construction of a new 2 500-delegate conference centre in Mombasa.
A second factor is co-operation among governments and the private sector. In Rwanda, for example, government has been keen to engage with a number of industries in order to drive economic growth – telecommunications, IT and tourism stand out.
The African Travel Association commented last year on the fruits of the co-operation between the state and the private sector, highlighting the construction of a new airport in Kigali, the purchase of new aircraft by the national airline, and the state’s programme to promote Rwanda as a destination for conferences and exhibitions.
Collaboration among industry players is also an important factor. When airlines and hotels put their heads together, it becomes clear how the availability of air routes and flight schedules impacts tourist potential. Without suitable air access, hotels will not be developed since the hotel investment makes sense only if it is easy for the guest to reach the area.
In South Africa’s Western Cape region, a project known as Cape Town Air Access brings together local government, the City of Cape Town, the Airports Company of South Africa and Cape Town Tourism. As a result of this initiative, there has been a substantial increase in international arrivals – and over R3 billion in direct tourism spend. Among the many benefits is an increase in tourism-related employment opportunities.
As for factors that prevent the realisation of the potential for tourism, there are quite a number:
Among some governments there is little appreciation of the potential for tourism in their countries. In Nigeria, for instance, only business travel visas are available yet. With its seven major waterfalls, the country could develop as a leisure tourist destination. The lack of infrastructure around areas with good tourist potential is a hindrance.
Kasaba Bay in Zambia, for instance, is an incredibly beautiful natural environment but, lacking the infrastructure needed to make it accessible to tourists, it remains under-developed.
In some cases, governments look at visas and airport taxes as a way to raise revenue, not appreciating the fact that, by loading the government income derived from these transactions, travel becomes far more expensive than in other parts of the world.
”Ultimately,” Bryer explains, “tourism could be a major factor in driving economic growth.”
This article was first published in African Independent on 10 March 2017.