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Post-covid renewal, reimagining & expansion: Hotel franchising in Africa shines brightly as a strong operating model for future growth

The voco The Bank Johannesburg Rosebank.

Africa’s hospitality industry is on an upward trajectory with travel and tourism growing at a rapid pace. According to the first UNWTO World Tourism Barometer, the continent, alongside the Middle East and Europe, performed the strongest during 2023 with a 96% recovery of pre-pandemic visitors.

South Africa is experiencing a similar recovery trend to its international hospitality counterparts with growth in tourism and business travel having recorded 3.5 million travellers to its ports of entry and exits during December 2023, surpassing figures for November 2023 (2.6 billion) and December 2022 (2.9 million).

A proven success, and the number one model for international brands, hotel franchising can be viewed as a trifecta; the property owner or developer who wants to open a hotel and to leverage the associated recognition and value of aligning with a hotel brand; the hotel brand, whose aim of franchising as a business model is to grow and expand globally, and a third-party operator like Valor Hospitality who assist both property owner and hotel brand in driving the strongest commercial returns.

We have seen international brand franchises deliver better results for property owners in competitive markets and it has become the number one business model in the USA and Europe,” says Michael Pownall, Managing Partner: MEAA Valor Hospitality. “It is delivering stronger commercial results, which is well worth exploring in Africa.”

The benefits of hotel franchising from a commercial sales, marketing, reputational, comfort, safety, and security point of view ticks all the boxes for property owners wanting to attract international travellers who seek a comfortable stay under a recognisable hotel brand. In addition, property owners can also tap into the global loyalty systems i.e., the customer base who want to be continuously rewarded for brand loyalty.

More than ever, the hotel franchising business model is desirable to property owners who want to be more involved in their properties and who demand stronger commercial returns from their assets,” says Mike Devereux, Chief Development Officer for Valor Hospitality. “They require operators like Valor Hospitality, who have a regional presence with a hands-on approach, to push the performance.”

Countries go through turmoil and cycles and the risk in opening a new hotel often has a major impact on a property owner’s decision to do so. The costs and effort put into establishing an independent hotel brand as opposed to aligning with an international hotel brand certainly mitigates this risk,” he says. “We have found that property owners who have developed a hotel in partnership with a hotel brand, continue developing with that same brand because they are extracting extreme value from doing so.”

Referring to themselves as a FIMOS – Fully Integrated Management and Operations Solution, Valor provide every service possible to clients as well as a full suite of unique Hospitality Advisory ideas with proven results. Valor embarks on the hotel franchising journey with a property owner by reviewing what the business requires, the position of its surrounding market, and by offering solutions and opportunities to enable healthy results that will deliver to the maximum.

Essentially, Valor Hospitality is on the ground with a 360-degree approach, ready to engage with property owners and investors who are wanting to develop a hotel or who have an asset that requires assistance.

We play a critical role for property owners in that we are 100% aligned with each of our clients in finding the right solution however, in Sub-Saharan Africa, we have a master franchise agreement with IHG due to our global management of many hotels within their portfolio of brands. Our entire philosophy comes from a unique selection process for each asset. This independent objective and expert view are invaluable to owners.”

There is a strong emotional connection between Valor Hospitality and a property owner who would have more flexibility on many of the commercial terms with approval rights over certain matters of the business as opposed to a direct management agreement with the brand,” says Mike Devereux. “We work for the property owner, leveraging off the hotel brands.”

In recently celebrating its 10th anniversary, Valor Hospitality has built up local infrastructures in Cape Town, Johannesburg, and Dubai to support the African and Middle Eastern Markets coupled with performance perimeters that ensure that property owners receive the best possible returns. It’s first property in West Africa in the Democratic Republic of Congo (DRC), Hilton Kinshasa, is one example of Valor’s promise to its clients.

Centrally located in the La Gombe and adjacent to the Congo Trade Centre, Hilton Kinshasa offers 178-rooms and suites, business lounges, an executive lounge, a private pool terrace, 12 conference and event spaces with an impressive food and beverage offering and with a project deadline of only ten weeks, Valor Hospitality put together a team of 42 professionals for a presidential opening, drawing their resources from all over the world.

During this period, we hired close on 350 employees – and trained them. We had to deal with language barriers, sourcing suppliers, and setting up systems. The fact that we could mobilise a task force team to open the hotel in time was phenomenal and not something that we believe many operators can pull off,” says Mike Devereux. “Today, the hotel is performing at exceptional levels.”

Valor Hospitality remains “furiously focused” on Africa as a growth strategy with the development of hotels growing exponentially but it also remains closely connected to South Africa, naturally.

The voco The Bank Johannesburg Rosebank – the first voco branded IHG property in Africa and Valor’s flagship in its South African portfolio, has surpassed market expectations and continues to grow as its brand presence strengthens.

Using ACSA stats to monitor air traffic in Johannesburg, coupled with local market conditions, the Valor team monitored the return of regional travel during the construction of the 131-room project which experienced delays due to the pandemic. The hotel was the last entity to open due to limited travel, launching in February 2022.

Initially, we were concerned with the weakened industry and existing properties surrounding the voco lowering their rates. However, the voco The Bank Johannesburg Rosebank has surpassed our expectations with its market success visible through its occupancies and achieved room rates to date,” says Michael Pownall. 

Being the first voco to open on the African continent was a milestone. The project is unique in the mix of entities to offer the ‘work, sleep, eat, play’ concept. Its anchor tenants were in the building from November 2020 with Proud Mary and Workshop17 opening in early 2021. The partnerships between the entities were instrumental in the success of voco The Bank,” he says.

From a South African point of view, we believe that hotel franchising is here to stay. Hotel franchising delivers stronger results, giving property owners more control over their assets and flexibility where previously, brands had to manage in-house. The world has changed.”