The FT reports that InterContinental Hotels Group is positioning itself in emerging markets where there is ‘GDP growth and demand‘ (£) as things get bumpy in Europe. But you’ll search in vain for a mention of Africa - China, Middle East and South-East Asia are the regions in the frame.
IHG is traditionally strong in Asia-Pacific. But if you were to take the GDP part of the group’s reasoning in isolation, you could still be forgiven for thinking it has an Africa-shaped blind spot. Some of the world’s leading GDP growth figures are coming from Africa, particularly the west. According to World Bank estimates, Ghana posted 14% GDP growth in 2011. And a whopping 2012 growth forecast of 50% has been bandied about for Sierra Leone, though as I’ve argued elsewhere the drivers behind that figure merit closer examination.
But GDP isn’t everything, and ‘demand’ is the key word here. Many of those growth figures come off low bases. That doesn’t mean they aren’t positive, but it does suggest these are markets that aren’t mature from the point of view of a global hotel group.
Accra offers an example of sorts. Walk into IHG’s Holiday Inn property here and you’ll notice a clear difference from the cheap-and-cheerful US equivalents. It has multiple dining options, an attractive pool area with barbecues and live music, and a car park full of 4x4s. As everyone in the city knows, it’s where Obama stayed on his 2009 stop-and-chat.
The evidence of money is no illusion, but that difference in positioning isn’t because Accra is generally richer. It’s because IHG sees Accra as a one-property town. The city has a very limited international leisure market – most are visiting expat friends and family, heading to hostels or taking their backpack onto the first available tro-tro out of the city - and an international business market that has so far been happy with, and offered the best returns on, a solid four-star experience with good airport links. A standard US-issue Holiday Inn wouldn’t cut it, but an upscale InterContinental property would be overkill. So instead of a range of IHG brands at various price points, as you’d see in Johannesburg and to a lesser extent Nairobi, there’s one brand occupying the centre ground.
Ghana’s nascent oil industry has had an impact, of course, but the growth appears to be mostly sideways. Movenpick’s new city centre property has taken things up a notch, but remains less opulent than travellers familiar with the brand might expect. Next to land are Hilton (now officially not happening), Radisson (2013) and Marriott (2014). They’ll offer something new, but the picture is essentially of the same market getting a bit larger, and new competitors coming in to fish it. As far as big brands go, budget and super-luxury options alike are conspicuous by their absence.
Head outside Accra and you won’t find a single international chain hotel. Infrastructure isn’t great, and neither regular business traffic nor package tourism has ‘opened up’ the region, in that most unpleasant of travel industry phrases. Ghana has the GDP growth part, but it doesn’t have the demand part (or it has the wrong kind of demand). One reading of IHG’s strategy is that it sees a similar picture across the continent - South Africa aside, arguably - and is leaving other brands to move in as it explores more familiar and better-segmented markets elsewhere.
Pic: Holiday Inn Accra, by African Sun on flickr
Posted on February 15, 2012
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