The tourism sector is expected to drive Africa’s economic growth following the African Continental Free Trade Agreement, AfCFTA, through its travel and hospitality subsectors. This can be attributed to the progressive contribution of the two sectors to the continent’s GDP, from 7.8 per cent in 2016; 8.1 per cent in 2017 to 8.5 per cent (about $194.2 billion) in 2018). This impressive growth made African region the second-fastest-growing tourism industry in the world, with a growth rate of 5.6 per cent in 2018. In 2018, there were 67 million visitors to Africa on business and leisure.
This showed a seven per cent increase from 63 million recorded in 2017 and a significant increase from 58 million in 2016.This figure is expected to rise in astronomical proportions in the coming years when the AfCFTA becomes operational. There are 55 countries on the African continent with about 1.2 billion people, and with a combined GDP of $2.4 trillion. The expectation is that AfCTA would create the world’s largest free trade area. This will hopefully promote intra-African trade that currently stands at a paltry 16 per cent.
Globally, the impact of tourism and hospitality economy is very significant; the sector encompasses 266 million jobs and contributes 9.5 per cent of gross domestic product (GDP).
Available statistics also indicate that African countries such as Nigeria, South Africa and Egypt have experienced continued economic activities thus, creating demand from institutional investors as well as major hotel brands to see expansion into the region as a source of future growth. The high volume of global capital chasing real estate opportunities also contributed to the recent surge of M&A (Mergers & Acquisition) activities in the region. Travel and tourism remains one of the key growth drivers of the economy in Africa, contributing 8.5 per cent of the GDP in 2018, equivalent to $194.2 billion.
According to the 2019 Jumia Hospitality Report Africa, this growth record placed the continent as the second-fastest growing region in the world, with a growth rate of 5.6 per cent, after Asia-Pacific and against a 3.9 per cent global average growth rate.
Record also shows that Africa received 67 million international tourist arrivals in 2018, to record a 7 percent increase from 63 million arrivals in 2017 and 58 million in 2016. This gradual increase is attributed to the affordability and ease of travel, especially within the continent, with spending among domestic travelers accounting for 56 per cent as compared to 44 per cent international expenditure. Additionally, leisure travel remains an important component of Africa’s tourism industry, taking up a majority 71 per cent of the tourist expenditure in 2018.
Meanwhile, the PWC Hospitality outlook: 2019-2023, indicates that overall room revenue in South Africa, Nigeria, Mauritius, Kenya and Tanzania rose 7.4 per cent in 2018, up from the 1.9 per cent increase in 2017, principally reflecting a 28 percentage point turnaround in Kenya, a 15.4 percentage point turnaround in Tanzania, as well as a 7.2 percentage point improvement in Nigeria. Mauritius continued to grow at double-digit rates in 2018, but room revenue growth in South Africa fell to only 0.5 per cent.
The report also show an increase in both foreign and domestic traveler numbers, along with an expansion in several hotel chains on the continent, which reinforces the hotel sector’s potential for growth.
The free movement of people and goods within the continent will expectedly open up new vistas in the tourism industry, creating business opportunities for investors. A few years ago, Pricewaterhouse Coopers, PwC, predicted that the hospitality sub-sector would be one of the key drivers of economic growth on the continent. The prediction was premised on the fact that an increase in both domestic and international travels would lead to an expansion of hotel chains on the continent, which would, in turn, reinforce the growth potential of the sub-sector.
PwC named five countries in Africa where the hotel sector is going to experience growth, with significant increase in room revenue, namely: South Africa, Nigeria, Mauritius, Tanzania and Kenya. The company expected Nigeria to be the fastest-growing hotel market in Africa over a five year period, ending 2022.
Indeed, the forecast is that Nigeria will become the fastest-growing tourism market on the continent, with a projected 12 per cent compound annual increase. This forecast is predicated on Nigeria’s growing affluence which would make consumer tourism a more important sector. Adventure tourism is becoming more popular and the growing interest in experiences is allowing the country to attract visitors interested in the local culture.
International hotel brands have apparently recognised the potential of the African hospitality industry, which explains why some of them are currently embarking on expansion programmes on the continent. In 2017, the Hyatt hotel chain announced plans to double its presence in Africa by 2020. Marriot started an expansion programme that would increase its portfolio on the continent by 50 per cent by 2023. It is the same year the Hilton group intends to double its presence in Africa, while Radisson will reach the same goal in Francophone countries on the continent by 2022.
A number of African hotel brands are establishing strong footholds on the continent, though without the spread of their international counterparts. The spread has started, all the same. The big ones are predominantly South African-owned, like Tsogo Sun under which are Southern Sun and Sun International, Protea as well as Laico Hotels and Resorts.
The expected growth of the hospitality sub-sector is going to impact on many other sectors in the value chain the reason it is predicted to be an economic growth driver. Such sectors include agriculture, garment, civil, mechanical and electrical engineering; furniture, manufacturing, etc.
Hotels will rely on local farmers for sources of agricultural produce, including poultry, beef and fish, thereby creating jobs and enhancing those businesses, with the ultimate benefit of improving the quality of lives of people in those sectors. They will also rely on local manufacturers of agro-allied products like fruit juice and dairy as well as alcoholic and non-alcoholic beverages.
Establishment of more hotels means a boost to the garment sector that provides the source for the supply of curtains, table cloths, bedsheets and staff uniforms. There will be something for interior decorators as well. The economic benefits for producers and suppliers in the entire chain are quite enormous. Job creation is expected to receive a boost in the coming years, a direct fallout of the growth in the tourism industry. In 2018, the industry provided direct and indirect employment for about 24.3 million people in 2018, accounting for approximately 6.7 per cent of total employment on the continent.
The expected boom in the industry is one that will create a healthy competition, which would enable hotels to bring out their best in terms of service delivery. This is an opportunity for highly skilled and specialised workers such as managers, chefs, waiters and porters – the category of workers that may also benefit from regular training by hotels intent on maintaining the highest standards. All these will contribute to improving the quality of service delivery. The emerging scenario is one that holds high hopes for African hotel brands, though it will also task their ingenuity and resourcefulness in the face of stiff competition from international brands.
Tourism to the African continent has proven to be resilient in the face of economic and political uncertainty, impacts of droughts and other regulatory changes. The opportunities are aplenty for this industry to enjoy further growth albeit at a more modest pace. However, as we continue to see there are also a number of challenges facing each country. This is an industry that is reactive to the smallest change in political, regulatory, safety and sustainability matters,” Pietro Calicchio, hospitality industry leader for PwC Southern Africa, said in a statement.
A couple of factors are responsible for the growth in the sector within the continent, with Internet penetration being one of them. Available statistics show that penetration in the continent has gone up from 27.7 per cent in 2017 to 35.2 percent in 2018. With over 453 million Internet users, the rise of mobile technology is certain. In many countries the penetration of Internet is well above 50 per cent and this is a promising number for hotels to invest in mobile technology. Several issues, such as online bookings, booking confirmations, push notifications, guest feedback requests, guest reviews, and so much more can be tackled effectively, thus. Though Africa has a long way to go, there is still enough scope to make the most of the current scenario.
Meanwhile, for the last two decades or so, tech adoption in the hospitality industry has been on the rise. Especially in the last decade, several disruptions have transformed the way hotels operate. Right CRMs from replacing booking registers to maintain reservation logs, to kiosks replacing guest-facing staff to improve check-in and checkout processes, several advancements have taken place from the technological standpoint. And yet, it appears as if we are only just getting started.
The pace at which tech-adoption happens is a function of several factors such as budget, specific business requirements, availability of options, personal stigmas, etc. As for Africa, the biggest bottleneck is the lack of Internet connectivity. With sustained growth in Internet penetration, technology will steadily transform the climate of hospitality industry. Again, with the millennials contributing to about 30 per cent of the continent’s population, the need to adapt to their ways is high. Customization and personalization, on the other hand, have become key in the hospitality sector; nothing is as powerful as personalized service. From the inception stage right through the every-day guest experience activities, personalizing is non-negotiable. In the backdrop of several large hotel chains investing in Africa, it is very essential to retain the local essence as well. Be it open APIs allowing more tech customization, or targeted and customized marketing initiatives, to hyper-personalized guest experiences, this trend is surely going to bring in some sweet victories.
However, the premise is that, in due course of time, a cloud-based Property Management System will be the norm across the continent. When the best-in-class systems come together, your cloud-based Management System will be invincible. The myth that a reservation system alone is capable of handling the day-to-day activities of a hotel is soon dissolving, the world over. Hoteliers are waking up to the real potential of a cloud-based PMS that allows integrations with all the other systems that contribute to a holistic property management solution.
It is worthy of note that 2016 and 2017 saw some nasty high-profile cyber security breaches taking place across Africa. While regulators are imposing serious financial penalties on organizations that fall prey to such breaches, the trend has yet to subside. With cloud-tech adoption gaining increasing momentum, the chances of cybersecurity threats and breaches are minimized. Managing hotel operations on a cloud-based Property Management System gives multiple benefits; the most important ones being complete data security and anytime-anywhere access to your hotel data. An on-premise PMS can never compete with a cloud-based PMS when it comes to data security. But to realize the full potential of the sector, experts are of the opinion that cooperation from all industry players is required. Most importantly, governments have to be willing to eliminate visa requirements for African nationals traveling to their countries; there should be free movement across the continent.
https://www.vanguardngr.com; hospitality-as-key-driver-of-africas-economic-growth
https://guardian.ng/saturday-magazine/statistics-indicate-growth-for-africas-tourism-hospitality-sector/
A standing committee of the Hospitality and Tourism industry committee (HTIC). It provides global advisory and related industry insights to the Hospitality and Tourism industry committee on how to globally scale-up the operations and impact of the Hospitality and Tourism industry in Africa; to promote its global competitiveness and improve its collaboration with science and technology Research Institutions in Africa and other parts of the world. It would also help to build collaborations with other partners in other parts of the world.
It would be made up of the following:
Would be responsible for the oversight of Hospitality and Tourism industry committee. It will work to ensure the continued growth and development of the Hospitality and Tourism industry committee in Africa and to promote its continued upscaling within the African region and globally.
It would be made up of:
Would be responsible for the review of emerging technical, business, political and related issues impacting on the industry in Africa and advising the Hospitality and Tourism industry committee appropriately. It shall have powers to set up various technical and or expert committees to execute various aspects of its assignment related to the industry in Africa with a view to enhancing its growth and development including organizing various meetings for this purpose.
Membership of the committee:
Would be responsible for the smooth engagement of the Hospitality and Tourism Industry in Africa with relevant Government Agencies/regulatory bodies concerned with the setting up and or operations of the Hospitality and Tourism industry in Africa. It will ensure continued the good relationship of members of the Hospitality and Tourism Industry committee and various public agencies concerned with regulation and or operations of the industry in Africa. It would ensure the creation and operation of appropriate platforms for promoting good understanding between the industry members and those of the relevant publics in Africa.
Membership of the Committee:
Nominations are invited for membership of the following committees.