Globally, the impact of tourism and hospitality economy is very significant; the sector encompasses 266 million jobs, and contributes 9.5 per cent of gross domestic product (GDP).
Available statistics also indicate that African countries such as Nigeria, South Africa and Egypt have experienced continued economic activities thus, creating demand from institutional investors as well as major hotel brands to see expansion into the region as a source of future growth. The high volume of global capital chasing real estate opportunities also contributed to the recent surge of M&A (Mergers & Acquisition) activities in the region.
Travel and tourism remains one of the key growth drivers of the economy in Africa, contributing 8.5 per cent of the GDP in 2018, equivalent to $194.2 billion.
According to the 2019 Jumia Hospitality Report Africa, this growth record placed the continent as the second-fastest growing region in the world, with a growth rate of 5.6 per cent, after Asia-Pacific and against a 3.9 per cent global average growth rate.
Record also shows that Africa received 67 million international tourist arrivals in 2018, to record a 7 percent increase from 63 million arrivals in 2017 and 58 million in 2016. This gradual increase is attributed to the affordability and ease of travel, especially within the continent, with spending among domestic travelers accounting for 56 per cent as compared to 44 per cent international expenditure. Additionally, leisure travel remains an important component of Africa’s tourism industry, taking up a majority 71 per cent of the tourist expenditure in 2018.
Meanwhile, the PWC Hospitality outlook: 2019-2023, indicates that overall room revenue in South Africa, Nigeria, Mauritius, Kenya and Tanzania rose 7.4 per cent in 2018, up from the 1.9 per cent increase in 2017, principally reflecting a 28 percentage point turnaround in Kenya, a 15.4 percentage point turnaround in Tanzania, as well as a 7.2 percentage point improvement in Nigeria. Mauritius continued to grow at double-digit rates in 2018, but room revenue growth in South Africa fell to only 0.5 per cent.
The report also show an increase in both foreign and domestic traveler numbers, along with an expansion in several hotel chains on the continent, which reinforces the hotel sector’s potential for growth.
“Tourism to the African continent has proven to be resilient in the face of economic and political uncertainty, impacts of droughts and other regulatory changes. The opportunities are aplenty for this industry to enjoy further growth albeit at a more modest pace. However, as we continue to see there are also a number of challenges facing each country. This is an industry that is reactive to the smallest change in political, regulatory, safety and sustainability matters,” Pietro Calicchio, hospitality industry leader for PwC Southern Africa, said in a statement.
A couple of factors are responsible for the growth in the sector within the continent, with Internet penetration being one of them. Available statistics show that penetration in the continent has gone up from 27.7 per cent in 2017 to 35.2 percent in 2018. With over 453 million Internet users, the rise of mobile technology is certain. In many countries the penetration of Internet is well above 50 per cent and this is a promising number for hotels to invest in mobile technology. Several issues, such as online bookings, booking confirmations, push notifications, guest feedback requests, guest reviews, and so much more can be tackled effectively, thus. Though Africa has a long way to go, there is still enough scope to make the most of the current scenario.
Meanwhile, for the last two decades or so, tech adoption in the hospitality industry has been on the rise. Especially in the last decade, several disruptions have transformed the way hotels operate. Right CRMs from replacing booking registers to maintain reservation logs, to kiosks replacing guest-facing staff to improve check-in and checkout processes, several advancements have taken place from the technological standpoint. And yet, it appears as if we are only just getting started.
The pace at which tech-adoption happens is a function of several factors such as budget, specific business requirements, availability of options, personal stigmas, etc. As for Africa, the biggest bottleneck is the lack of Internet connectivity. With sustained growth in Internet penetration, technology will steadily transform the climate of hospitality industry. Again, with the millennials contributing to about 30 per cent of the continent’s population, the need to adapt to their ways is high.
Customisation and personalisation, on the other hand, have become key in the hospitality sector; nothing is as powerful as personalised service. From the inception stage right through the every-day guest experience activities, personalising is non-negotiable. In the backdrop of several large hotel chains investing in Africa, it is very essential to retain the local essence as well. Be it open APIs allowing more tech customization, or targeted and customized marketing initiatives, to hyper-personalized guest experiences, this trend is surely going to bring in some sweet victories.
However, the premise is that, in due course of time, a cloud-based Property Management System will be the norm across the continent. When the best-in-class systems come together, your cloud-based Management System will be invincible. The myth that a reservation system alone is capable of handling the day-to-day activities of a hotel is soon dissolving, the world over. Hoteliers are waking up to the real potential of a cloud-based PMS that allows integrations with all the other systems that contribute to a holistic property management solution.
It is worthy of note that 2016 and 2017 saw some nasty high-profile cyber security breaches taking place across Africa. While regulators are imposing serious financial penalties on organisations that fall prey to such breaches, the trend has yet to subside. With cloud-tech adoption gaining increasing momentum, the chances of cybersecurity threats and breaches are minimised.
Managing hotel operations on a cloud-based Property Management System gives multiple benefits; the most important ones being complete data security and anytime-anywhere access to your hotel data. An on-premise PMS can never compete with a cloud-based PMS when it comes to data security.
But to realise the full potential of the sector, experts are of the opinion that cooperation from all industry players is required. Most importantly, governments have to be willing to eliminate visa requirements for African nationals traveling to their countries; there should be free movement across the continent.