Breathing new life into Africa’s hotels: trends, transformations and role of project management

In 2021, Kasada Capital Management acquired eight hotels, with a total of more than 1,600 keys in Sub-Saharan Africa. This transaction is considered to be one of the largest single deals in the hospitality sector to date, and it highlights the ongoing changes in the region's hospitality industry. Due to the strong interest from various investors, we anticipate seeing more similar deals in this sector in the upcoming years.

The notable growth in Sub-Saharan Africa’s hospitality industry is primarily driven by three key components: the growing demand for lifestyle hotel, a preference for upgrading existing properties rather than constructing new ones, and the reliance on project delivery partnerships that bring together international expertise and local market knowledge and flair.

The global influence of lifestyle hotels, a trend not limited to Africa, is a significant force in the hospitality sector. These establishments transcend the traditional concept of accommodation, striving to create a 'social destination' that fosters new connections and social engagement. Key features of lifestyle hotels include vibrant bars, trendy restaurants, rooftop lounges, art galleries in the lobby, and unconventional gyms.

Lifestyle hotels offer a unique blend of boutique hotel personalisation and chain hotel affordability. Their distinct positioning places a strong emphasis on design, with avant-garde, cutting-edge, quirky, and cool elements. The allure of lifestyle hotels is further enhanced by their style, brand loyalty programs, and unwavering service standards.

Hotel investors are shifting their focus away from new developments and instead opting to purchase existing assets that require refurbishment, repositioning, or rebranding. According to a recent survey by JLL, approximately 80% of hotel investors are actively seeking value-add investment opportunities in the sector.

This shift is motivated by a combination of factors, including the high costs associated with construction loans for new builds and the escalating prices of materials and labor. Upgrading existing properties is often considered a more feasible option, as it is easier to underwrite and brings assets to market more quickly compared to starting a new development. Moreover, this approach aligns well with the growing global emphasis on environmental sustainability.

To meet guests' evolving needs and stay competitive with newer hotels that offer fresher designs and trendier concepts, many aging properties are undergoing value-add enhancements. These enhancements may include expanding room capacity, introducing lifestyle-oriented concepts to boost non-room revenues, or converting underutilized spaces into additional rooms or food and beverage (F&B) concepts. This approach is preferred over constructing new developments in different locations as hotels build their reputation in specific buildings or locations.

International expertise and local market knowledge are crucial factors that contribute to successful hotel refurbishments. International expertise brings a wealth of experience and best practices from around the world, providing valuable insights into global trends, design concepts, and operational efficiencies. This knowledge ensures that the refurbishment project adheres to international standards, enhances the guest experience, and meets the expectations of travelers from various backgrounds.

Equally important is local market knowledge, which caters to the unique needs and preferences of the local clientele. Understanding specific cultural nuances and market demands is essential for tailoring the refurbishment to resonate with the local audience. Local market knowledge also aids in navigating local regulations, building codes, and permits, ensuring a smooth and compliant execution of the project.

By integrating international expertise and local market knowledge, hotel refurbishments can incorporate global design trends while catering to the specific requirements of the local market. This combination creates a powerful advantage, allowing the refurbishment to appeal to both international travelers and the local clientele, establishing a strong foothold in the market. A prime example of this successful integration can be seen in the Kasada Capital Management transaction, where their partnership with QIA and Accor brings together local market knowledge with significant international expertise.

The success of a hotel refurbishment project lies in the hands of experienced development and project managers who understands the complexities of renovating existing hotel assets and the needs of investors and operators in the hospitality industry.

This expertise is invaluable in project planning, coordination, and risk management, ensuring a smooth execution despite the intricacies involved in working within a live hotel environment and multiple stakeholders. 

A structured project team enables informed decision-making during the development project. This includes compliance with regulations while effectively managing costs, timelines, quality and stakeholder expectations. With the right experience and industry knowledge, a high-quality result that meets the needs and expectations of all stakeholders involved can be achieved.