OBG talks to Reto Wittwer, President and CEO, Kempinski Group

Interview: Reto Wittwer

How much growth potential do you see for international hospitality brands in Africa?

RETO WITTWER: It is common to only think of safaris or adventure tours when thinking of travel in Africa, but impressive economic growth in sub-Saharan Africa over the past 10 years reflects the potential for the travel and tourism business in Africa. Compared to the world economic growth rate of around 4%, sub-Saharan Africa’s GDP is forecast to grow by 5.8% in 2012, and the average African economy is expected to outpace its Asian counterpart in the next five years.

Economic growth across a variety of sectors continues to attract more investment in Africa, which will increase the number of visitors to sub-Saharan Africa. The millions of people travelling to the region will be looking for places to stay, places to eat, places to hold meetings and events, and places to relax.

What level of potential do you see for growth in the luxury segment in West Africa?

WITTWER: Six of the world’s 10 fastest-growing economies over the past 10 years were in sub-Saharan Africa. In West Africa, Angola, Côte d’Ivoire, Ghana and Nigeria top the list of the highest growth forecasts for the continent in 2012. Africa now has a fast-growing middle class. The rate of foreign investment has soared 10-fold in the past decade. These are the kinds of indicators we look for when deciding to enter an emerging market. Growth in industries that will attract foreign investment, which will bring in foreign visitors who are looking for high standards of luxury, as well as a robust local economy, which will support dining outlets, spas, and meetings and event spaces.

The economies in West Africa are seeing rising productivity levels as a critical mass of better-educated young people of working age is entering the job market, but staffing our hotels with well-trained staff from the local market remains a challenge for us. As more five-star brands wake up to potential in Africa, the competition for recruiting and retaining staff increases.

To what extent can Ghana compete with other more established sub-Saharan markets?

WITTWER: Ghana is entering a phase of unparalleled growth, following the boost from the start of oil production. According to the IMF, real GDP growth in Ghana is expected to be 8.8% in 2012, citing robustness of the economy. On the societal side, Ghana has the advantage of being a relatively safe and democratic country with low levels of corruption. Ghana has a population of hard-working, hospitable people who will continue to contribute to the development of the country. These are the essential elements to developing a world-class hospitality industry, which will soon be poised to compete with Kenya and South Africa.

What impact will international hotel brands have on the average price per room in Ghana?

WITTWER: Prices for hotel rooms in Ghana are high because of a dearth of supply; naturally as the supply increases rates should normalise. However, the expected growth of the country’s economy also indicates that demand will continue to rise.

Virgin Airlines recently increased the frequency of its Heathrow-Kotoka flight. Delta Airlines has expanded its African route map, using Accra as its West African hub. In addition to daily service to the US – four days nonstop from New York and three from Atlanta – Delta operates flights to Monrovia, Liberia and Abuja, Nigeria from Accra. Emirates Airlines SkyCargo commenced weekly Boeing 747-400F service to Kotoka International Airport in November 2011 in hopes of bolstering trade links between the UAE and West Africa.

Recent figures from online travel agency Expedia revealed that online hotel bookings in 2011 increased 150% from 2010, as it sold 40,000 West African room nights in 2011, with around 40% of that in Ghana. It focuses mainly on top-end hotels and business-friendly guesthouses in Accra. Against this background, the average room rate will probably remain on a comparatively high level, especially in luxury five-star hotels.