Hotel management agreements drive Africa’s hospitality expansion- Hotel Partners Africa

AFRICA – According to Trevor Ward, Managing Director of Hotel Partners Africa, franchising with global brands remains limited among African hotel owners, with 81% of last year’s development pipeline secured through management agreements due to challenges in financing and development.

Hotel ownership across Africa remains fragmented, with single-hotel owners being the norm, according to a panel discussion at the Atlantic Ocean Hotel Investors’ Summit.

José Maria Torras Mercader, group financial director at Mangalis Hotel Group, based in Senegal, stated that only a few hotel owners in Africa have multiple properties.

Mangalis, initially a mobile-phone company, began with the Radisson Blu Dakar and has since expanded to the 241-room Noom Hotel Dakar Sea Plaza, which is affiliated with the Radisson Individuals brand.

Today, Mangalis operates three in-house brands: Noom, Seen, and Yaas. Torras Mercader emphasized that Mangalis believes in real estate, explaining, “We started a chain because we didn’t want to pay fees to third parties.”

The company, which started in 2012, now owns seven hotels, with five owned properties and two under third-party management contracts, as well as five more in the pipeline, two of which are set to open in 2025 in the Democratic Republic of Congo and Senegal.

In the past five years, third-party operators and white-label management companies have become more prevalent in Africa, driven by increased development and operational costs following the pandemic.

Federico Holzmann Perez-Portabella, global head of real estate, investment, and development at Catalonia Hotels & Resorts, highlighted that Spanish hotel firms have used their balance sheets to establish a presence on the African continent, with Zanzibar, Tanzania, serving as a strong entry market.

Catalonia plans to open its first African property, the Catalonia Grand Zanzibar All Suites & Spa, in 2025.

Holzmann Perez-Portabella noted that hotel development in African markets often takes twice as long as in Europe, but for the Zanzibar project, the company broke ground in just six months.

Despite increased costs due to the pandemic, Catalonia decided to start from scratch, buying land and planning for a one-year timeline to open the hotel.

German hotel firm 12.18. Investment Management is also expanding into Africa. Johann Kerkhofs, head of business development, shared that despite his extensive experience in Africa and the Middle East, convincing lenders and investors to enter the African market remains challenging.

He explained that the company is focusing on asset-light ventures, with plans to form management agreements and bring in two investors once they establish a foothold in markets like South Africa, Kenya, Tanzania, and Namibia.

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