Business models in the African hotel industry

Author: Andrew McLachlan, James Kirk (yBC.tv)

Categories: Africa
Tags: hotel chains

Business models in the African hotel industry are discussed in this TV show by Andrew Machlan.

Highlighting the benefits of African business models

I think we probably, as an industry we talk too much about the challenges in Africa and not enough about the reasons why we’re all here.  There’s a great return on investment in Africa, purely from a margin point of view, our margins are better.

Our rent back periods are often a little bit faster.  So in a first world environment we’d say that a hotel takes 1,000 days to stabilise .  In parts of Africa, it takes a couple of months to stabilise.

 Our gross operating profits are higher.  And what we’ve also seen is we‘ve had hotel owners transact with hotels, so they build the hotels, open them and sell them.  There’s a great return on investment there.

And we don’t speak enough about those type of returns on investment.

We all get caught up in how long it takes to build a hotel and how long, and we have our containers stuck in shipyards and we can’t get them cleared. And those are issues that we really need to try and sort out.  But hotel real estates, as a hotel real estate class in Africa, is a good performing real estate class.  And as a straightforward business model it’s a good business case . I think job creation is phenomenal in hotels in Africa, we’re able to employ a lot of people.  We can employ people with fairly low skillsets and train them up quite quickly.  I think Africans naturally are friendly people. They are hospitable people. They might not do things technically correctly but they have the right attitude and they have the right smile and you can take somebody a lot further with the right attitude. And so we’re creating a lot of jobs.  And one employee in a hotel sometimes is feeding nine or ten people at home.  And the industry employs lots of people with permanent jobs for a long period of time, where a lot of other industries, because of technology, your workforce is getting smaller and smaller, because we’re still in the service industry we’re still able to employ a lot of people. _________________________________________________________________ If you found this video about business models in Africa interesting why not watch more TV shows on The Hospitality Channel?
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