As demand grows in Africa, hotels investors, operators rush in

A travel boom is underway in West Africa, and hotel investors and operators are making sure they are there to fulfill need for hotel rooms. No more is this evident than in Marriott International's purchase of Protea Hospitality Holdings, which Marriott agreed to buy for $186 million in January.

The transaction nearly doubled Marriott’s distribution in Africa to more than 23,000 rooms.

Now, Bloomberg reports that the Protea is now building five-star and three-star hotels in Lagos, Nigeria’s commercial capital, adding 400 rooms to the 700 it has in the country, Danny Bryer, director of sales, marketing and revenue for Protea, told Bloomberg.

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“With the surging Nigerian economy resulting in companies around the world seeking to do business, demand for quality hotel rooms is expected to increase substantially over the next few years,” said Bryer.

The number of hotels in Nigeria reportedly rose 88 percent to 6,200 in the two years through December, according to the country’s tourism development agency.

Another factor fueling demand is economic growth: Nigeria is Africa’s biggest oil producer and it will accelerate this year from an estimated 6.4-percent growth in 2013, driven by services, trade and agriculture, the IMF said.

“Improvements in the nation’s economic outlook are motivations to investors,” Sally Mbanefo, director general of the Nigerian Tourism Development Corp., also told Bloomberg. Hotel rooms grew to 186,000 from 99,000 over the past two years.

Protea’s expansion plans in Nigeria focus on Port Harcourt in the oil-rich Niger Delta, the nation’s capital Abuja and the southeastern state of Enugu, according to Bryer.

Economic growth in pockets of Africa isn't the only reason why hotel investors and operators are looking there: growth is also slowing in mature European and U.S. markets.

Protea currently has 10 operational hotels in Nigeria and around 115 in total in seven African countries, with two more scheduled to open in Ghana and Rwanda. Protea will open a 130-room hotel in Takoradi in the country’s western region later this year.

“For the moment, we’re focused on Nigeria and Ghana, but further expansion into other West African countries cannot be ruled out,” he said.

Marriott isn't the only hotel group invested in Africa. Starwood Capital Group is making moves there with its Louvre Hotels Group, as is Starwood Hotels & Resorts Worldwide's Sheraton brand.

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