aligned with the growth of africa

Aligned with the Growth of Africa

Lonrho Hotels

Ewan CameronCEO, Lonrho Hotels

Hotels are a real contributor to economic growth; both enabling economies to grow and a means by which domestic product is converted into employment, consumption and cash returns. In both developed and emerging towns and cities hotels contribute to the establishment of sustainable destinations; their function enhances other business activities. People transacting business take confidence from their being a branded hotel, in addition to enjoying the hotel’s amenities, when its near their place of business.

LH is a vehicle for investing and generating returns from Africa’s growth; its brands are tooled ready to grow to stabilised annual earnings of $40+mn from 2019.

Since 1953 when passenger jets began to regularly transport people to such remote destinations as Nairobi, Kinshasa, Lusaka, Victoria Falls and Johannesburg the international business traveller has demanded and is willing to pay for quality hotel accommodation wherever they wish to transact business.

Kenya Investment Forum 3rd Dec 2013, Ewan Cameron, Lonrho Hotels 2

Lonrho Hotels is a hotel company that trades in Africa’s high growth cities, trading brands that are as dependent on international business travellers as local trades and business people;

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Lansmore, luxury hotel brand designed by business travellers for business travellers. Base camp for doing business

easyHotels are for the many, not the privileged few. Great sleep in a great place.

African origin coffees and teas complemented by a popular local food menu

Kenya Investment Forum 3rd Dec 2013, Ewan Cameron, Lonrho Hotels

• 13,443,014 is the total recorded inventory of branded hotel bedrooms globally. Supply increased by more than 2.3mn bedrooms since 2000 (Smith Travel Research (STR) July 2012).

• Middle East & Africa region has experienced a 2.5% compound annual growth in branded hotel bedrooms since 2000• Hotel industry has undergone two major revolution that can be dated back to InterContinental’s acquisition of

Posthouse Forte in 2001 1) branding and 2) separation of ownership from the operations. • On a global scale, hotels operated under a management agreement are prevailing and increasingly replacing owner-

operated hotels and other contract structures such as lease agreements. However, in some regions (e.g. Europe), the lease agreement is still the predominant business model and its replacement by the management agreement is proceeding at a slower pace.

• A significant share of hotel investment in Europe is undertaken by institutional investors such as real estate funds, pension funds or insurance companies. These investors often require (either by law or their articles of incorporation) income from rent and lease. Due to this fact, these investors can only enter lease agreements, not management agreements (which would generate income from trade and business).

• Lenders in Europe are conservative, which causes banks to have a preference of lease agreements; where the lessee bears the full operational risk and the lessor receives a steady cash flow to cover the amortisation of debt.

Shape, size and structure of the Hotel industry

ME&A has 5% of the world’s branded hotel supply

41%

30%

22%

3%5%

Number of branded hotel rooms

US Europe AsiaS America MEA

4Kenya Investment Forum 3rd Dec 2013, Ewan Cameron, Lonrho Hotels

Growing demand that is hugely under supplied

Africa branded hotels Global branded hotels

1% or only 0.17mn of the 13.5mn branded global hotel bedrooms are today in Africa

1%


Size of Africa’s hotel market

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Data from the Economic Survey 2013 shows the number of business travel arrivals increased by 1.7 per cent to 236,000 in 2012

from 232,100 in 2011, unlike tourist arrivals which fell by 7.6 per cent to 1.22 million from 1.32 million over the same period


7Kenya Investment Forum 3rd Dec 2013, Ewan Cameron, Lonrho Hotels

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Investment driving growth


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Huge market = East Africa Community

$98billion GDP145mn people



Yaoundé

Kilimanjaro

Harare

Blantyre Doha

Juba

Johannesburg

Ndola

Gaborone

Maputo

Accra

Mombasa

Luanda

Addis Ababa

Kigali

Malinda

Livingstone

Amsterdam

Mumbai

Lusaka

Dar es Salaam

Lagos

Bujumbura

Dubai

Pemba

Abu Dhabi

Lilongwe

Entebbe

Zanzibar

Luxembourg

Guangzhou

Khartoum

Bangkok

London

Amsterdam

Paris

Kinshasa

Lubumbashi

Istanbul

Hong Kong

Djibouti

Cairo

Zurich

Bamako Abidjan

Nairobi = the hub of Africa = 45 daily connections

Nairobi sustains one of the highest rates..YTD 2013 ADR, USD


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2008 2009 2010 2011 2012 2013

-40

-30

-20

-10

0

10

20

30

40

Nairobi City hotel marketYoY variance

Occ ADR KES

STR data OCT YTDKenya Investment Forum 3rd Dec 2013, Ewan Cameron, Lonrho Hotels

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2008 2009 2010 2011 2012 2013

-40

-30

-20

-10

0

10

20

30

40

Nairobi City hotel marketYoY variance

Occ ADR KES Supply

STR data OCT YTDKenya Investment Forum 3rd Dec 2013, Ewan Cameron, Lonrho Hotels

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Apply the principles of economics and allow your organisation to; gain leverage from local know-how, be customer focus and respond quickly to market forces

Establishing a business in Kenya has been the right decision for many who’ve come before

Kenya is the largest EAC economy. Achieve a Kenya success story will enable your business to grow into Rwanda, Uganda, Tanzania and Burundi, and then throughout Africa’s high growth destinations. Most business strategists would support this approach to growth.


aligned with the growth of africa

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predominant business

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