The African hotel market has experienced significant growth in recent years, driven by increasing demand from both leisure and business travellers -and the continued investment into infrastructure by foreign investors and prudent governmental planning in selected countries.
As the African continent continues to develop, the hotel industry is evolving, with many independent hotels considering affiliations with international brands. In this article, we explore the benefits of converting from an independently branded hotel to an international brand, and how this strategic move can create value for hotel owners, investors, and guests.
The African Hotel Market: An Overview
Africa’s hotel market is characterised by a mix of independent hotels, local chains, and international brands. South Africa, as an example, dominates the market with their local chains. While independent hotels have traditionally dominated the landscape, the rise of international brands is transforming the industry.
According to a 2024/5 hospitality report by Trevor Ward from W Hospitality group, the African hotel market is expected to see a significant increase in branded hotel supply, with over 577 new hotels expected to open in the coming years, and the pipeline continues to grow at a rapid rate. There are 50 hotel chains present in Africa with a combined 145 brands, so the choices are endless.
Benefits of Converting to an International Brand
So, why are curated independent hotels in Africa considering conversions to international brands? The benefits are considerable and worth investigating by independent owners who may have already been operating their own created brand or who are in the development planning phase of a new hotel.
Affiliating with an international brand can significantly enhance a hotel’s visibility and credibility in the market. A well-known brand name can attract more guests, investors, and business partnerships from corporates, sports, MICE and associations . The single biggest asset the brands own is “the customer” and international brands have considerable access channels to the customer, through their very powerful global loyalty programmes. Global brands communicate regularly with their loyalty customers through an omni-channel approach that involves newsletters, social media and search engines with programmatic capabilities and algorithms – tracking customer activity across their browsing patterns
International brands bring with them established operational systems, processes, and standards, which can help improve a hotel’s efficiency and profitability from opening or conversion, shortening payback time periods for investments. They also provide guests with a standard expected from a brand, particularly by frequent travellers across multiple destinations -almost a “badge for expected guest standards” and “a familiar stay experience”.
Global brands also have extensive marketing and distribution networks, which can help increase a hotel’s exposure and drive more bookings. The globally recognised GDS pseudocodes are well used by travel agencies and TMCs and provide easy ranking access on screens. Inclusion in global RFPs for corporates is a valuable given, and brands provide good exposure for African hotels in their leisure and holiday programmes too.
A major challenge in Africa is access to skilled labour and managerial talent that are trained in global hospitality standards. International Brands have renowned training modules and workshops providing access to training and development programmes, which can help hotel staff improve their skills, control standards and provide better service to guests.
Arguably independent hotels struggle with economies of scale, effectively investing too much in systems, FF&E, OS&E and in setting up processes and IT infrastructure to launch an independent hotel. By affiliating with a global brand, whether a hard brand or soft brand, independent hotel owners can benefit from economies of scale in procurement, marketing, and other areas. Soft brands are generally collection brands offered by international hospitality groups that allow independent hotel owners to keep their identity but conform to certain minimum standards, particularly fire, life and safety standards whilst adopting brand distribution platforms etc
While converting to an international brand can create significant value for hotel owners, there are also challenges and considerations to be aware of:
- Brand consistency – Independent hotels must ensure that they meet the international brand’s standards and consistency requirements, which can involve significant investment in renovations and upgrades. Fire , life and safety standards are key considerations which inevitably requires upgrades at considerable costs.
- Fees and royalties – Hotels must pay fees and royalties to the brand, which can impact profitability, and should be investigated for impact on margins.
- Loss of autonomy – By affiliating with a brand, independent hotels may have to adapt to standardised systems and processes, which can limit their autonomy. However, the hotel franchise model is becoming more prominent, allowing owners to maintain control, provided they employ a reputable and approved management company or meet minimum criteria themselves to operate a brand and be approved as a franchisee.
For any aspirant hotel brand considering the move to an international affiliation, the advice would be to carefully conduct a cost-benefit analysis on the level of investment, incremental upside and the culture fit between the respective brand owner and the individual, independent property owner. There are many reasons to curate and launch your own brand, but there also risks about early adoption, financial pressures and slow support by markets.
Global brand owners are becoming increasingly aware of supporting entrepreneurs and independent owners in their quest to operate independently but give support in the form of evolving collection brands and providing access to global travellers. Favourable commercial terms are possible, and determining the right brand fit imperative!
