The impact of Covid-19 on Africa’s hotel industry: Radisson shares its experiences
Several unusual business opportunities arose for hotels in Africa during the Covid-19 pandemic, according to Tim Cordon, senior area vice president for the Middle East and Africa at Radisson Hotel Group.
Radisson’s hotels have stepped up by offering its rooms as a haven for quarantined travellers, as places to isolate health workers and as emergency call centres for governments and others managing the pandemic.
The hotels have also been used to house guests awaiting repatriation to their home countries and for essential workers flown in for special projects.
Cordon says Mozambique has done “quite well” and some of the hotels in Lagos have traded at levels comparable to the pre-Covid-19 situation. In South Africa, business has been slower as a result of the strict lockdown.
On average, the group has been trading at about 20% of normal activity although this varies significantly from market to market.
International travel restrictions have boosted domestic tourism in many countries, according to Cordon. He cites strong demand for Radisson’s beach resorts in Tunisia. “This is a consistent trend across all markets.” The group is hoping to see a similar trend of ‘staycations’ in Cape Town – where it has six hotels – as summer approaches and the lockdown eases. A downside is that only about 30% of the group’s hotels are aimed at the leisure market, with most properties catering to business travellers.
The Radisson Hotel Group, now owned by a consortium led by China-based Jin Jiang International Holdings, has just over 80 hotels in Africa. Its biggest market in sub-Saharan Africa is South Africa, where it has 11 establishments under different brands and five under development.
The future pipeline includes new developments in Ghana, Côte d’Ivoire, Ethiopia, Madagascar, Mali, Cameroon, Cape Verde, Nigeria, South Sudan, Zambia and Zimbabwe. It also has a significant presence in North Africa, with many more hotels in development in this region.
Cordon says the group has made some adjustments to its expansion plans in the wake of Covid-19 but the long timeline for development means the organisation needs to keep an eye on the future.
“Some of our hotels in the Middle East and Africa have been delayed a bit, between six and 12 months.” This is not only because it is not the right time to open a new hotel, but also because of shortages of inputs, such as lifts, which are made in China where production was halted for a while.
“What hasn’t changed is our desire to expand our portfolio across the continent. We think Africa is still under-serviced in some locations. A large number of developing economies offer enormous opportunity,” adds Cordon.
Managing the Covid-19 shock
Cordon indicates the impact of Covid-19 on the hospitality industry has been unprecedented. “It really has been a catastrophe for the industry. Every single hotel we manage in Africa has been dramatically affected.”
In the first few weeks of the crisis, the group focused on the human crisis and developing a rapid and dynamic response to it. “It progressed pretty quickly into a business issue. Our planning focused on which hotels to keep open and which we needed to close. In some cases, it was government mandated but in others, we made the decision. I am pleased and proud to say – now that we are hopefully coming out the other side of the crisis – that we kept the majority of our hotels open and trading to some extent over the entire period.” This kept the brand active in the market and enabled the company to take advantage of the few opportunities available over this time.
The group’s efforts to continue doing business despite the pandemic have been supported by the launch earlier this year of its safety protocol programme in partnership with SGS, a company specialising in inspection, verification, testing and certification. A 20-step cleaning and safety protocol was developed with SGS and applied in all hotels.
“We defined very quickly full operating levels of our hotels based on clear advice from our partner and that really helped to give governments, corporate clients and tour operators the confidence to take advantage of what opportunities we had.”
Following these protocols has required considerable adjustments such as putting in protective barriers, introducing contactless check-in and adapting the food and beverage service, for example.
Radisson is rebuilding the lucrative meetings industry with the introduction of hybrid meeting options in selected hotels, which combine live groups engaging online with other live groups elsewhere. Cordon predicts this will be an important shift in the meetings space for hotels as the pandemic lingers and even afterwards. “But human beings are social animals; I think meetings will come back. It is a question of when, which is so difficult to answer,” he adds.
The uncertainty over how long the pandemic will last makes it difficult for hotel operators to predict any sort of recovery trajectory.
Much depends on the opening of borders and the availability of flights as well as the consumer appetite for flying and the situation regarding quarantines in destination countries.
People need to feel safe and secure when they travel, Cordon continues. “They need to know when they get to their destination, there isn’t going to be a sudden border closure, either where they are or where they have come from.”
Where to from here?
The group has nearly 40 hotels in its development pipeline in Africa and continues to move forward, with some adjustments.
Exploiting the opportunities depends on getting the right partner, particularly in difficult locations. In line with global trends, the company has no investment in real estate and operates hotels under management contracts. However, the group is very involved in the hotels: from the conceptual design stage to the quality of finishes. Just getting a hotel built in Africa can be a long and expensive process but according to Cordon, Radisson is open to converting and refurbishing existing hotels, where viable. This is quicker and cheaper than building a hotel from scratch.
The group is also looking at how to assist successful independent hotels that have battled during this time with some type of measures to assist them; to “strengthen their commercial engines”.
Much will depend on the length and breadth of the pandemic, which will determine the growth of economies and, with that, opportunity. “The outcome for the industry depends on the recovery. We don’t know how that will be. I don’t think anyone knows. We just hope that by this time next year, we are in a better place than we are today.”