Companies pursuing regional expansion in Africa need to have a good understanding of the markets in which they want to operate. Stuart Cook, managing director of Protea Hotels East Africa, says it is critical to be on the ground to get a good grasp of the local business culture as opposed to operating head offices from afar.
Originally from South Africa and also co-owner of Protea Hotels in Uganda, Cook relocated to the East African nation a decade ago.
“Frankly, if you have to be successful in a region you have to be based in the region. I have lived in Uganda for 10 years. I think the only way you intimately know a country or a region is if you are there. You can’t operate your head office from a remote destination. I don’t believe it works. I don’t believe you understand the investment culture if you are divorced from where the activities are actually happening.”
Cook notes that doing business in Africa’s diverse markets is not the same as doing business in other parts of the world.
“Africa is a great place to do business. I think it is important to understand the culture and the way business is done in Africa.”
Cook oversees six hotels operated by Protea in Tanzania and Uganda. The South Africa-based hospitality group is currently constructing a 90 bedroom hotel in Hoima in western Uganda, and expanding one of its existing facilities in the country by an additional 100 rooms. The group is also developing two hotels in Rwanda and another in Zanzibar.
Cook says the group is also exploring opportunities in Kenya, particularly large scale developments of at least 150 rooms.
“We like to seek out stable investment destinations and East Africa is a really buoyant destination for us. I think that opportunities abound in this region,” says Cook. “It is a rapidly growing market. You have got some really strong economies in Kenya and Uganda. Tanzania has been really strong for a long time and then you have a fast emerging tourism conference destination in Rwanda. It’s very interesting for us to be involved here.”
Last year, US-based hotel chain Marriott Hotels acquired the Protea Hotels brand across Africa. The acquisition catapulted Marriott into becoming the largest hotel chain on the continent. Protea operates 125 hotels in seven sub-Saharan African countries and has been expanding its portfolio in East and West Africa.
According to Cook, the demand for new hotels in Africa is increasing due to urbanisation, growing intra-Africa trade, and economic growth.
“If you look at what’s happening with Africa, across the entire continent the confidence in investing in Africa is extremely high. All of the developers and [hotel] operators have got very large pipelines,” he says. “Corporate business fills our hotels. There is some leisure demands in some leisure destinations, for instance, on the Kenyan coast and in Tanzania, but if you look at the major centres in Africa… we have got a highly urbanised population. That is going to drive the business through to our hotels.”
Finding skilled staff
One of the major challenges Protea faces in East Africa is access to human talent.
“It is always getting the right people to run your business. That is probably the greatest challenge for us across the region whether it be in Uganda or in Rwanda. The market is not as evolved as the European market, so for us it’s about spending a lot of money on training and educating our staff and getting us to an international level.”
Although recent terrors attacks in Kenya and instability in the region have prompted travel warnings and affected tourist arrivals, Cook downplays the long-term impact of such events.
“Terrorism and insecurity is a concern everywhere in the world. I don’t think that East Africa is a particularly special example. I think that any terrorism threat is a limited threat. I don’t think it has a real long-term effect on corporate or leisure business. I think there is a great deal of confidence in the East African region and, whilst there is some terrorist activity, I don’t think it should be allowed to affect our business negatively.”