16 hotels in five years is playing it rather safe.
Starwood Hotels & Resorts Worldwide Inc. plans to increase the number of African hotels it operates by 50 percent over the next five years as positive growth prospects trump short-term security and economic concerns.
The U.S. owner of the Sheraton and Le Meridien brands has signed deals to run its first hotels in Mali, Kenya and Tanzania, while adding to the company’s portfolio in Nigeria, Senegal and Egypt, Neil George, a senior vice president, said in an interview on Wednesday in Addis Ababa, the capital of Ethiopia. The Stamford, Connecticut-based company plans to operate more than 50 hotels on the continent by 2020, up from 34 now, he said.
A slowdown in Nigerian economic growth this year and attacks by Islamic militants in Kenya haven’t changed Starwood’s case for expansion, said George, who works on acquisitions and development in Africa and the Middle East.
“We look at what we think the long-term prognosis for the market is, because our hotels are not short-term measures, they are 20, 30, 40, 50 years in that market,” he said. “That is the kind of long view that we have to take.”
International hoteliers are seeking to expand in African countries to exploit an increase in travel and higher economic growth rates than in the U.S. and Europe. Marriott International Inc. bought Cape Town-based Protea Hospitality Holdings for about $200 million last year to accelerate growth on the continent.
In high-risk cities, Starwood works with the developers and owners of the hotels to ensure security measures are in place, George said.
“Part of our mission as an international company going into these markets is to offer international travelers a bit of a refuge, a safe haven that is secure, that they can feel comfortable in,” he said.
Even so, Starwood isn’t considering investments in Somalia and Libya due to security risks, George said.
This article was written by William Davison from Bloomberg and was legally licensed through the NewsCred publisher network.
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Photo credit: Entrance to the Sheraton Addis in Addis Ababa, Ethiopia. Starwood Hotels and Resorts