Wolfgang Neumann, President and CEO, the Rezidor Hotel Group: Interview

Interview: Wolfgang Neumann

How has demand for higher-end hotels changed in sub-Saharan Africa?

WOLFGANG NEUMANN: The entire African continent is considered one of the fastest growing continents thanks to its economic fundamentals, abundance of natural resources, favourable demographics and improving infrastructure development. As the World Bank said, “Africa is poised for a growth take-off, much as India was 20 years ago and China was 30 years ago.” When it comes to hotels, most regions of Africa lack internationally branded hotel rooms or offer a rather outdated portfolio. There is an imbalance of supply and demand, which offers considerable development potential for international hotel operators. The demand is not only related to the upper upscale brands, but also to mid-market offers. Today, key markets for international hotel operators are countries like Nigeria and South Africa.

When investing in the hospitality industry, what is the balance between risk and reward?

NEUMANN: International hotel groups often operate asset-light businesses; they usually do not invest in hotel infrastructure, and are not involved in real estate development. However, it is true that some assistance can be provided to hotel owners with quasi-equity instruments like mezzanine financing. For instance, Afrinord – a fund investing in hotels in Africa – is set to co-finance hotel projects with subordinated loans. However, a number of variables have to be taken into account with these projects. Africa still faces a range of challenges, such as the continent’s dependence on natural resources, political instability and a complex trading environment.

What sort of potential is there for West African countries to diversify into leisure segments?

NEUMANN: Many countries in West Africa such as Nigeria and Ghana are primarily driven by business travel due to their important oil and gas, minerals and agriculture sectors. Development of the leisure sector will also depend on the safety and security situation. For instance, in Nigeria we are monitoring this development closely and are confident that the country will be able to consolidate in close cooperation with international governments and institutions. In the years to come other West African countries will certainly focus more on their leisure segments. For example, Senegal and Côte d’Ivoire have outstanding coastal areas, where resort developments can be accelerated to support development.

In the past decade we have seen an impressive development of infrastructure and improvement of airline connections across Africa. Such structural changes will continue to play a crucial role in the growth of both leisure and business tourism in Africa.

How can worker qualifications be improved to ensure quality of services?

NEUMANN: Africa’s workforce is growing at a fast pace – by 2050 the continent will feature 25% of the world’s total workforce. Furthermore, according to recent data, 70% of Africa’s population is below the age of 30; the continent’s workforce is thus enormous. Also, at Rezidor we hire local staff, along with a few expats. In the hospitality business we hire based on attitude and then give training to develop workers’ skills. It is also worth mentioning that the hospitality industry is one of the leading job creators in many African countries.

How can large hotel groups maintain international corporate standards in Africa?

NEUMANN: By pursuing quality leads and following efficient business structures, challenges can be minimised from the start of a project. Regional presence and knowledge is crucial, and it is also important to achieve the right balance between international brand standards, that have to be applied and respected, and local adaptation if and when necessary.