Tuesday, 31 October 2017

TANZANIA: Arusha Hotel Taken Over By Marriot International Hotels

Marriot International has acquired Arusha Hotel, the oldest tourist establishment in northern Tanzania.

The hotel chain said the 106-room Arusha Hotel will be operated under the Four Points name by Sheraton management.

A growing middle class and demand for travel and high quality lodging has given us a significant opportunity to enhance our footprint and play our part in supporting emerging markets across the continent, Marriot International Hotels president Alex Kyriakidis said.

The acquisition is part of Marriot’s goal to own 200 hotels comprising more than 37,000 rooms by 2022. The group seeks to generate a $8.5 billion capital investment and create 50,000 direct and indirect jobs through this development process, Mr Kyriakidis’s statement added.

Marriot’s expansion is a boost to the Tanzania government’s drive to attract more investors and other service providers.

Tanzania reportedly attracts 1.2 million tourists every year. About 80 per cent of them, nearly 900,000 end up in the Northern Circuit, the Ngorongoro Crater, Serengeti National Park and Mount Kilimanjaro.

Already, the government is drafting a new tourism policy targeting the development of new tourist attractions, hotels and other investments in the sector.

The Ministry of Natural Resources and Tourism has held several meetings with tourist stakeholders from the Tanzania mainland and Zanzibar, seeking to draft a new policy to replace the Tourism Policy of 1999.

The Deputy Permanent Secretary in the ministry, Dr Aloyce Nzuki, said the new policy will consider diverse attractions and services including conference tourism, historical and cultural heritage sites, eco-tourism and beach.

The Tanzania Association of Tour Operators chairman Wilbard Chambullo said that the policy would bring together private sector players to work with the government in developing tourism.

A tourism and hotel consultant in Arusha, Leopold Kabendera, said global marketers and hotel chains patronise Tanzania, mostly from the US, South Africa and Europe.

We are looking for a better policy that would create public and private partnerships in tourism. This would attract more investors to inject capital through hotels and other business services,” he said.

Marriott International a global Hotel chain has announced that it will open a hotel in Zanzibar to tap into the isle’s tourism business.

The planned $330 million hotel will be part of the Amber Resort complex, and the largest accommodation facility occupying 1,750 hectares of Indian Ocean coastline in the northeast of the island.

It is expected to be operational in four years.

Marriot Middle East and Africa president Alex Kyriakidis said the hotel design will combine modern architecture and a touch of Zanzibar culture to bring a unique feeling of Tanzanian hospitality.

This development will be a catalyst for premium tourism to Zanzibar and Tanzania in general, and will also feature East Africa’s first signature golf course, he said.

The Zanzibar Amber Resort, a mixed-use project, will offer a retail souk, a tropical aqua park, a marina, an equestrian centre and international polo club, Mr Kyriakidis added.

Anantara Hotels and Resorts, another leading hotel chain, has also announced the development of Anantara Zanzibar Resort, expected to open in three years, featuring 100 guestrooms.

Minor Hotels chain CEO Dillip Rajakarier said the new accommodation and tourist service facility will be their first property in the region.

The development of Anantara Zanzibar Resort marks a key strategic move that provides synergy and diversifies Minor Hotels’ well-established presence in East Africa, complementing the Elewana collection of luxury safari camps, lodges and beach resorts in Tanzania and Kenya, Mr Rajakarier said.

Verde Hotels from South Africa is a new entrant in Zanzibar, developing and managing the Mtoni Marine Hotel.

The company has entered into a joint venture with Bakhresa Group, a local Tanzanian company.

The Cape Town-based hotel group will run the 142 room facility.

Bakhresa Group chairman Said Bakhresa said they will run Mtoni Hotel under the name Hotel Verde Zanzibar.

Verde Hotels director Samantha Annandale said they chose Zanzibar for its strong position in regional tourism.

Meanwhile, reluctance by local hotel developers to work with international brands has left the Africa with a huge deficit of branded hotel rooms, limiting the continents ability to tap into the global hospitality trade.

Experts say that indigenous developers often find the additional cost of bringing their properties to the standards demanded by international chains a major barrier.

The growth of local markets that are not keen on international brands is another incentive to stay local, they add.

According to results of research unveiled by the W Hospitality Group at the African Hotel Investment Forum in Kigali this past week, despite having some of the highest investment rates on the continent, East and West Africa are the regions most affected by a deficit in branded hotel rooms.

The research shows that nine countries in Africa do not have a single branded hotel, eight have only one, while almost half the continent (25 countries) have two or fewer brands present.

Only ten countries have 10 or more brands present, while just 28 countries (53 per cent) have branded hotels located outside the national capital or in the main commercial city.

Experts have attributed this status quo to the fact that local hotel developers have been slow at working with international hotel brands hence settling for their local hotel brands which are largely operating without branded rooms.

A large number of local property developers in many African countries are reluctant to work with international brands, hence operating hotels with unbranded hotel rooms.

It’s easier to get these brands if the hotel is an international brand said Karl de Lacy, the International Development Director for Best Western hotels and resorts.

Cost has been a big factor, the additional investments required to upgrade a property to fit a global brand has also been an issue with local developers, he said.

When asked to explain form an industry perspective how branded hotel rooms can be low at the time the continent is registering a commendable value in hotel investments, he said the biggest opportunity in Africa is now in mid-scale hotels because of the mass market the segment has.

Experts have observed that in Africa local developers don’t care much about branded rooms provided they have local customers coming to the hotels, that many of these clients are also not keen to look room brands

The biggest opportunity is in mid-scale, the international brands cater for a certain level of customers, but the more local hotel owners understand the opportunities they have if they work with international brands the better, said De Lacy.

On investments he said the growth in property has been commendable but many have not transitioned into operating as international brands which explains why many operate with un-branded hotel rooms.

We want hoteliers to be successful, a happy hotelier is one that is engaged with a brand, he noted.

Hotel industry analysts have said that this shortfall in supply shows that there are still huge opportunities to develop hotels in many countries in sub-Saharan Africa.

Africa currently has 301 hotel projects in the pipeline, accounting for 57,011 rooms, or 11.0percent of the continents existing room supply.

Demand has been growing in many markets and that with careful planning, and good advice there can be an opportunity to generate substantial returns on investment in the hotel industry.

The majority of upcoming new supply this year are in sub-Saharan Africa, with 59 per cent of rooms in the development pipeline, North Africa is the largest single region with 41 per cent followed by West Africa 33 per cent and East Africa 11 per cent.

Nigeria has up to 6,100 branded bedrooms across 41 hotels, with 21 brands and 14 hotel companies represented in 9 cities and 61 more hotel projects and more branded bedrooms 10,313 in the pipeline, however a country with a population of almost 192 million, a lot needs to be done.

Despite having a number of big properties, Uganda has less than five hotels managed by international brands.

Disagreement between developers and international brands has seen two international brands – Carlson Rezidor and the Hilton, eschew the management of Uganda’s grandest property, the 296 room Pearl of Africa than opened doors this month under the One & Only brand.

Simba Corporation, a family-owned Kenyan firm with interests in automotive and hospitality sectors, has expanded its hotel portfolio after signing an agreement to buy a 35 per cent stake in Hemingways Holdings Ltd.

Simba Corp said Monday the deal, whose value remains undisclosed, would enable it strengthen its position in the hotel industry, while Hemingways said the proceeds of the share sale would be used to finance its growth and expansion programmes.

The auto dealer, Simba, made its first foray into hospitality sector in 2010 aiming to provide luxury hotels for travellers. It currently owns Acacia Premier hotel in Kisumu and holds significant stakes in Olare Mara Kempinski (Masai Mara) and Villa Rosa Kempinski (Nairobi).

Through our partnership with Hemingways we intend to continue to build on this strategy. This investment is therefore aligned to Simba’s goal of creating a substantial hospitality business platform with the intention to expand national and within the region said Adil Popat, Simba Corp’s chief executive.

The acquisition comes barely a month after Mr Popat announced a freeze of plans to set up a chain of mid-priced hotels across Kenya, citing a glut in the market.

It also comes at a time when a wave of mergers and acquisitions are sweeping across the Kenyan investment landscape.

Last week, regional oil marketer Hass Petroleum sold a 40 per cent stake to Gulf’s Oman Trading International in search for capital to strengthen its operations.

The Kenyan-based Hass is facing stiff competition in its oil business, controlling a paltry 1.9 per cent the market share in the fuel sales.

Global oil marketer Shell is also gearing up to sell its 20 per cent stake in Vivo Energy for $250 million to Vitol subject to regulatory approvals.

After the transaction, Vitol would control a 60 per cent majority stake in Vivo, while private equity fund Helios Investment Partners retains 40 per cent.

Vitol and Helios jointly operate 1,600 stations across 16 African countries through Vivo Energy.

Tourism Observer

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