Hospitality Sector Lacks Enough Funding Despite Many Willing Investors
Hotel developers across the continent of Africa see funding as the most significant challenge harboring the growth of this critical sector.
Radisson’s new head of development for Africa states that the industry is yet to develop to the point of being able to make for a regional priority for global capital.
Ramsay Rankoussi, while on an interview, added that the process for an investor to acquire financial support from financial institutions is complicated as many documents are required prior.
With some investors being willing to undergo the journey of documentation provision, still, the funds provided from institutions and financial networks are unable to see the completion of a single project.
“Costs of financing are usually high, and therefore an operational burden that can be carried on a project and its initial investment may quickly result in questioning the viability of pursuing it or not,” said Ramsay.
According to Ramsay, most African countries lack local structures able to provide world-class professional design teams and ensure proper work.
“Usually, costs of construction across Africa is the highest globally due to those factors, but as we see hospitality becoming a national and regional priority for many African countries, we can expect the professionalization of the sector and the reduction of the associated costs over time,” he told Top hotel News.
“Being part of Jin Jiang International, the second-largest hotel group in the world in terms of a number of rooms, brings us immense opportunities to access the growing Chinese demand but also secure new sources of capital and resources relevant to Africa,” he added.
The group’s development strategy interlinks to the Chinese sponsored Silk & Belt road initiative.
Kenya is slowly shifting its focus to target the corporate travel market in order to match international guest expectations. Kenya’s hospitality industry contributes an average of 10% to the country’s GDP, which is higher than the continent’s average of 8.1%. It’s worth mentioning that the travel and hospitality sector in Kenya is the country’s second foreign exchange earner after agriculture.