• Thursday, June 13, 2024
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‘We maintain average growth target of over 10 new hotels per year’

‘We maintain average growth target of over 10 new hotels per year’

In recent times, Radisson Hotel Group has recorded remarkable feats in Africa as the fastest growing brand in Nigeria and Africa, amid reducing industry average hotel construction period from 5 to 7 years to less than 36 months, among others. In this interview, Ramsay Rankoussi, vice president, development, Africa & Turkey, of the global hotel chain, speaks to Obinna Emelike on the group’s growing portfolio, reasons for the feats, sustainability plans, strategy for further growth, update on its 150 hotel target, among others.

Congratulations on Radisson Hotel Group being the fastest growing brand in Africa, what do you attribute this feat to?

I think what we aim to bring forward as a true measure of growth is the number of openings rather than signings. A lot of competitors claim their growth on projects that never materialize while we only celebrate once those projects open. I think it is critical that the narrative changes and that we recognize that the true contributing effects are properties that create employment directly and indirectly and that become true economic catalysts in their markets. Unfortunately, too much attention has been put on pipeline growth across the industry and the rate of erosion in Africa remains very high, which demonstrates a lack of diligence and proper accountability from some of our peers. What sets us apart is an owner-centric approach with dedicated teams and relevant brands that balance the lowest development cost with access to development solutions. Our focus on conversions in the last few years has equally confirmed our pipeline as healthy and active, given the short time between signing to opening. We brought down the industry average from 5 to 7 years of construction period to now less than 36 months with some projects even reaching 12 to 20 months to completion as new builds, never achieved by any other operator across the continent.

Where are you on the 150 hotels target in five years?

We have close to 100 hotels and 16, 000 rooms in operation and under development in Africa. Despite the challenges that emerged as a result of the pandemic, in the last two years alone, Radisson Hotel Group has opened 14 hotels in the region and signed over 25 new hotels, adding more than 4, 800 additional rooms to its portfolio. This equates to 90 percent of our pipeline materializing and translates to a 15 percent growth year-on-year across our African operating portfolio. Based on the ambition of reaching 150 hotels, we maintain an average growth target of over 10 new hotels per year representing roughly 1,500 to 2,000 additional rooms. Our growth has remained exclusively organic and this sustained momentum demonstrates both the confidence that the investment community has in our brands and performance but also the recognition guests and travelers show to any of our Radisson hotels.

What are the new record milestones you have achieved across Africa and especially in the last two years?

As mentioned, our milestone is reflected in the quality of our pipeline which is the result of both, a cleanup of projects which were no longer active, and the addition of new properties which were either conversion of existing hotels or flagship developments.

We had drafted a clear strategy in 2020 and the last two years have been reflecting the efforts and commitment in its execution. Our growth strategy has a very simple approach. One-part concentrates on focus countries while the other centers around creating clusters. We believe in creating a critical mass and city scale development strategy with a focus on key countries and surrounding markets.

The Group’s focus countries are Morocco, Egypt, Nigeria and South Africa. Each member of our development team leads through this approach with both the proximity of their geographical zone as well as, and very importantly, their cultural and language understanding, reinforcing our alignment with each focus market. Local solutions and local knowledge are key to our approach.

As part of those successes, each of those focus countries have witnessed considerable growth and expansion of our presence, specifically Morocco and Nigeria where we are capturing market share and positioning ourselves as future market leaders.

Read also: Nigerian Hotel and Catering Institute congratulates Umo Eno, A’Ibom gov-elect, tasks on tourism development

You seem to have balanced prioritization in your Francophone and Anglophone markets. Why and how balanced these markets are?

Historically, our group was much more present in Sub-Saharan Africa and quickly gained its leading position across key countries but was not as represented in North or West Africa. We also realized the synergies the Francophone markets had with Europe, where Radisson Blu is the largest upper upscale brand and where the strong brand awareness would be quite beneficial. As such, we decided to put a focus and acceleration in Morocco where we grew from 2 hotels to over 11 hotels in less than 2 years. The country represents a point of entry between Europe and Africa and was therefore a strategic bridge for us to consolidate our presence and leverage our success in both continents.

Equally, West Africa, where we have both existing hotels in operation and under construction and where we’ve created a cluster for expansion with countries such as Senegal, Ivory Coast and Cameroon, has recently shown some of the best performance and economic growth.

We previously had over 70 percent of our presence in Anglophone markets and now have well-adjusted to roughly 53 percent in Anglophone and 47 percent in Francophone markets, demonstrating the recent growth sustained in North & West Africa, but also a more focused and balanced development strategy.

Can you explain more on quick conversion as your development strategy?

Given the challenges still existing in Africa, especially in terms of cost and access to capital and cost of construction, the industry has witnessed a great erosion of projects which never materialize. Referring to the importance of valuing hotel openings rather than signings, we have tried to focus on projects where we knew that both, the erosion risk was minimal and that our entry to market would be much faster versus the usual timelines of completion. Conversion became a natural growth strategy during Covid where availability of liquidity was low and the appetite of hotel development even less attractive. Overall, 70 percent of our signings during the last 24 months were qualified as conversions.

Moreover, Radisson Hotel Group has multiple success stories of repositioning existing hotels under its brands which resulted in positive value creation to every stakeholder. This has created a confidence in the market where Radisson became the right partner in providing adequate solutions to ensure quick conversion and handover period but also possessing the right brand recognition and commercial strength and expertise across the continent.

What other strategies do you have for growth in Africa?

Our growth has remained exclusively organic compared to many of our peers which demonstrate our deeper knowledge and expertise of the continent. While we will maintain this asset light strategy for Africa, we are open to exploring strategic alliances and other ventures with local and regional chains.

We believe the strength of our people, distribution and network effects would support local brands to access a wider audience while retaining part of their independence and autonomy. Radisson Individuals was created with this mindset, and we believe that as we witness a strong rebound in travel globally that the relevance of our offering and pragmatic thinking will lead to more and more affiliations.

The group’s growth in existing markets and entry into new markets is also driving our efforts. Both are critical to our growth on the continent, which forms an important part of our global expansion strategy but also cements our position as the most diverse hotel company across the continent with a presence over 30 countries.

Having built a strong base with our portfolio of city hotels, we’re also proud to be increasing the diversity of our offerings on the continent through the likes of our resort product. Being able to simultaneously drive this growth by expanding in existing markets and entering new ones speaks to our ethos as an agile and flexible organization that responds swiftly to changing market demands.

Reducing the timeframe between hotel signing and openings is great, but how do you achieve that with the harsh economic realities in Africa?

It comes down to two elements – either through conversion or with the right partner. While the conversion approach is relatively simple and practical, finding the right partner is much more complex and subject to more diligence. We take pride in the partnerships we create but also value the importance of finding the right investor which not only has the financial means to complete the project, but shares the same vision towards quality, safety and standards.

We recognize the external factors that have made hotel development either more difficult or more expensive, and this is why we continue to create local and tailored solutions while ensuring we remain relevant to our owners with cost effective brands and support during the entire cycle.

Thus far, which market has the most hotels in your portfolio in Africa and which is catching up with the leader?

Our top markets in terms of presence and including both hotels in operation and under development are South Africa with 15 hotels, Morocco with 11 hotels, Egypt with 11 hotels and Nigeria with 10 hotels. Those countries are identified as focus countries, meaning that we could expect and anticipate reaching a scale of over 20 to 25 hotels in each of those markets in the future.

Morocco and Nigeria have continued to show a positive growth momentum while South Africa is slowly re-emerging so we could anticipate that those two countries become our largest contributors over time.

What are we to expect from Radisson Hotel Group in Nigeria, can you explain further about your current portfolio, new signings, conversions, and openings?

We currently operate 5 hotels in Nigeria with an additional 5 hotels under construction and all due to open within the next 24 months. Our original presence has been concentrated in Lagos; however, we are now expanding in Abuja while further diversifying our brand presence across all brands.

We already have Park Inn by Radisson, Radisson and Radisson Blu in the country and are anticipating opening the first Radisson Collection by the end of this year in Lagos. In pursuit of this diversification, we also believe the growth of serviced apartments products and the eventual introduction of our lifestyle Radisson RED product will further cement our market leadership position across Nigeria.

In your assessment, what is responsible for the overall record-breaking growth by Radisson Hotels in Africa today?

It is and will always be a team effort. The success of our growth is attributed to every person working at Radisson Hotel Group. From creating memorable stays in every property, to delivering positive results or simply supporting functions from design to marketing, everyone is a growth ambassador and creates an impact in our African journey.