The Rebound Project: New Players in the African Hospitality
By now it is painfully obvious that Africa in general, and the hospitality industry specifically, will take regretfully long time to recover from the heavy blows of COVID-19. With international borders closed in the majority of countries and strict rules imposed on domestic travelers, resulting in record low occupancy levels and sky-high rates of closures (78% of properties closed in sub-Saharan Africa), the sector desperately needs not only tax breaks, concessions and labor market support, but a big chunk of plain old money.
The money talk
Kasada Capital, a Johannesburg based private equity firm, seems to have taken it upon itself to do just that. The company managed to attract over US$500 million in equity that it is planning to deploy on hospitality projects in 10 key cities across the continent. This generous move should be coupled with the relevant actions from International Monetary Fund if Africa is to benefit from the holistic approach to the issue. Once the alignment between the big contributors and local financiers is achieved, capital will indeed play an essential role in the revival process, as capex is likely to rise substantially due to the hygiene and safety regulations imposed on properties by the governments and expected to be taken seriously by even the most risk-loving travelers.
According to Olivier Granet, Kasada Capital’s CEO, the current crisis could also be a good time to revive the persistent and rather painful issue in African travel – visas. Paired with the infrastructure insufficiencies, visas have arguably been the biggest barrier to travelers, which means that it might be necessary to talk about them again, now more than ever. While infrastructure cannot be altered in short periods of time, the regulations could, and policymakers should pay attention to the ones that could ease the “new normal” negative shocks at least to some extent.
Apart from Kasada Capital, another global player is making its appearance on African hospitality market. CG Hospitality, the hospitality arm of CG Corp Global, the first multi-billion-dollar conglomerate from Nepal, has announced the acquisition of two iconic properties in Kenya - Fairmont Mara Safari Club and Fairmont The Norfolk. The move is consistent with the company’s plan to firmly establish itself in East Africa, following their 5-country growth strategy in the region. Such types of deals from large investors and decision makers may signal the reviving interest in and undying hope for the continent to come back to its feet once the pandemic has eased its iron claws.