It’s refreshing when you come across a foreigner passionate about Africa. The continent has become the new big market for multinationals all over the world. But Ewan Cameron, CEO of Lonrho Hotels is not jumping on the bandwagon, he’s had his sights set on Africa for a long time, and not only for business, he’s also ardent about the continent and its people.
“My interest in Africa came at an early age, I’ve always been interested in the people and the culture,” says Cameron.
Cameron has a long history in the hotel industry though he’s only 39. Born and raised in Glasglow, Scotland, he started out waiting tables and cleaning rooms at the Swallow Hotel and Conference Centre in Dundee, while he studied Business Sciences at the University of Dundee. After graduating in 1992, the Swallow Hotel Group offered him a position as front house manager of the hotel. His keen interest in hotel management won him a transfer to the Glasglow Swallow Hotel, where he became the business development manager. Then the United Kingdom’s two biggest hotel groups, at the time, Thistle Hotel Chain and the Forte Hotel Group, noticed him. Cameron went with Forte, because of its international exposure. Thistle is the biggest hotel chain in the UK but had no hotels outside the region. Forte has hotels all over the world. Cameron’s portfolio included some heavyweight clients like UBS, the Ford Motor Company and PricewaterhouseCoopers. He later took over new business development at Forte. In 1999, Forte bought the Holiday Inn franchise. And in 2002, Cameron moved over to head up franchising. This is where he got his real feel for Africa. He travelled extensively overseeing operations in the Middle East and Africa. Cameron worked closely with Southern Sun, which at the time was running some of its hotels under the Holiday Inn brand. But in 2008, Southern Sun cut ties with the Intercontinental franchise and dropped the use of Holiday Inn.
Cameron also decided it was time to cut ties.
“I tried for years to convince Forte to expand in Africa, but they were not interested, they wanted to expand in Asia and the Middle East, I wanted to grow Africa. I drew up a strategy for Africa and Lonrho liked it,” Cameron recalls. The Lonrho Group has been operating in Africa for over 100 years. It is invested in luxury hotels across Southern Africa. It also runs airlines and is involved in the agricultural sector. The group took Cameron’s strategy and made him CEO in 2010. Since then, he has wasted no time in implementing his ambitious plan. Lonrho has partnered with easyHotel Group to roll out 50 new hotels by 2016.
“There is growing demand in Africa especially for the business traveler,” notes Cameron. Lonrho has five-star luxury hotels in 16 countries in Africa. The group is now moving towards building more business-friendly hotels.
“These hotels wouldn’t have the luxury that our high-end hotels offer, but they’re comfortable for the business person going on a quick trip,” he says. His strategy is to open hotels with a fresh and modern design. They will offer all the services a businessperson needs, like a conference venue, gym facilities, a coffee shop for meetings and full Wi-Fi. Hotel managers are also being trained.
“Our managers should be able to link travelers to local businesses and help link them to potential clients and vice versa; the hotel needs to become a one-stop shop,” he says.
The new low-cost easyHotels have opened in some countries with rooms from $35. In June, Lonrho opened a hotel in Gaborone, Botswana. Another hotel opened in Beira in Mozambique in July. There are plans for new hotels in Nairobi in Kenya, Dar es Salaam in Tanzania and Accra in Ghana.
Later this year, Lonrho will also open its first hotel in South Africa in the Johannesburg city center. The hotel will be situated outside the new Gautrain rail link from O.R. Tambo International Airport. In recent years, several international hotel groups have opened hotels in the affluent Sandton area, but not many have ventured into the city’s center.
Cameron is not one to follow the herd; he believes that not everyone travelling to Johannesburg wants to go to Sandton. He is also not too worried about going into areas that pose political and social risks. Lonrho recently purchased a second hotel in Kinshasa in the Democratic Republic of Congo (DRC). For decades, the country has been torn apart by war and civil unrest. This has not deterred Cameron who believes there’s rich tourism potential in the country’s capital. Cameron is certainly a risk taker but he does his homework and says he has an exit plan for every hotel the group owns. He works closely with the Mckinsey research group for facts, figures and other data on Africa. According to Mckinsey research, the DRC will be the fastest growing economy in Africa by 2026.
But not everyone has an appetite for risk. Tsogo Sun Holdings, Africa’s biggest hotel and gaming group, is not convinced there is a real demand for hotels in Africa. It already has a strong footprint in Africa with its Southern Sun hotels and feels more confident in South Africa than the rest of Africa.
“There are no volumes in Africa,” says Tsogo Sun CEO, Marcel von Aulock.
“African economies are small and there’s still very little corporate activity to propose new hotels.”
Tsogo recently posted a solid set of annual results. The group raised earnings 39% to R9 billion ($1.1 billion). Von Aulock is also no newcomer to the industry. He joined Tsogo’s finance department in 1999. Ten years later, he took over as the group’s CEO. He believes he understands the hotel industry and while he does see opportunities for further expansion on the continent, he feels the timing needs to be right.
Tsogo’s approach to the hotel industry differs from Lonrho’s. The group is focused on taking full ownership of hotels; it doesn’t just take over the management and operations.
“We want to own the land the hotel is standing on, we want to manage and operate it and own the brand, and it’s not always easy to do that. But we are not about taking the easy approach,” adds Von Aulock. The group recently closed its famous Southern Sun Grayston Hotel in Sandton after 30 years, because it didn’t own the land. The tenants raised the rent and Tsogo felt it was no longer feasible to remain on the property.
“This served as a lesson for us, that’s why it is more important now that we stick to our business model,” says Von Aulock.
But he concedes this is one of the main reasons it’s hard to penetrate Africa.
“Land is still a very controversial issue, the operating costs are very high. If we build a hotel in Africa, we have to set up our own power generation, our own water purification and sewerage systems—it requires a massive cash injection,” says Von Aulock. This is where Tsogo and Lonrho differ. Lonrho takes over existing hotels, rents the properties and provides the management and operational expertise to run the business.
Tsogo has also done well with its gaming business in South Africa, but says it has no plans to open casinos anywhere in Africa.
“Again there’s no market for gambling in Africa. The South African market is very different—our casinos here are doing very well, even in tough economic times, there’s still spending capacity in South Africa, not in Africa, there’s no middle-class in Africa and unfortunately that’s where the spending comes from.”
But Tsogo Holdings is not staying away completely. It’s still positive about future growth and says it will continue to look for opportunities. It owns 95 hotels in southern Africa, most of which are four- and five-star hotels. But last year, it ventured into the business traveler market opening a two-star StayEasy hotel in Lusaka, Zambia. The hotel is a nice fit for corporate travelers looking for tourist activities. It is attached to a shopping mall, another strategy Tsogo is exploring.
“We want our guests to have quick and easy access to any services they may need,” says Von Aulock.
Tsogo has also taken over distressed hotels successfully. The group recently bought The Grace in Johannesburg’s northern suburb of Rosebank for R85 million ($10.12 million). The iconic boutique hotel closed its doors in August last year after the operating company ran into financial difficulty. Tsogo Sun has spent over R20 million ($2.4 million) on refurbishing the hotel. The new 54 on Bath hotel opened its doors in July.