You can also listen to this podcast on iono.fm here.
Welcome to the latest episode of The Property Pod, South Africa’s premier property investor podcast.
We are looking at hotel development in SA and Africa in this edition of the podcast. Earlier this month Africa’s Travel Indaba took place in Durban, and several global hotel players and leaders were there.
One international hotel brand that has been bullish about South Africa and the African market is Radisson Hotel Group. On the pod we are talking to Ramsay Rankoussi, vice-president of development for Africa and Turkey. He’s based in Dubai. Ramsay, welcome to the Property Pod.
Highlights of his interview appear below. You can also listen to the full podcast above or download it from iono,fm, Spotify or Apple Podcasts.
Ramsay Rankoussi, the Dubai-based VP of development for Africa and Turkey at Radisson Hotel Group. Image: Supplied
Highlights
Ramsay, welcome to the Property Pod. The group’s next big opening in South Africa is the Radisson Safari Hotel in Hoedspruit at the foot of the Klein Drakensberg in Limpopo. Is that project on track and when is it going to open?
“Yes, totally. And we are very excited about this project. I think we anticipated opening probably around September/October this year, so just a few months ahead from now. And then what is truly exciting about this project is it’s actually the first safari-inspired property we’re going to have in the country.”
“So this is something that certainly demonstrates demand for new types of properties and certainly something Radisson is entering into. So we are truly excited, especially with the location itself.”
“The project [Radisson Safari Hotel Hoedspruit] is 138 rooms, very much in the bush, very much at the gate of the Kruger National Park, having a beautiful setup around it.”
“So it’s not too far from, as you mentioned, the town of Hoedspruit, just probably two kilometres away from it.”
“In terms of facilities you will have everything from an international restaurant, pool, bars, and then I think very outdoor-into-the-indoor in terms of design, truly trying to integrate what wildlife is around the property itself. In terms of an investment, I think this is done with a private investor, actually an international investor coming out of Europe [Lowland Group]. This project has been going on for probably almost three years in construction and design. So it’s an exciting project, [and] we’re truly looking to open it very soon.
How many hotels does Radisson have – or rather manage or own – in South Africa and the continent currently, and what does the pipeline stand at?
“Radisson actually is purely and exclusively a management company so we don’t own any hotels that we have. Worldwide we’re roughly at 1 200 hotels worldwide. If you’re take it across Africa we’re roughly at 100 hotels in operation and under development.
“If you look at the South African portfolio today, we actually have 30 hotels in operation and we have two hotels in development, including the one in Hoedspruit that we’re talking about.”
“We’ve always been historically, as part of the culture, very bullish on emerging markets, and I think Africa itself.
“When you look at Radisson, Radisson has been kind of [at a] late stage in term of entering the market. We only entered in the early 2000s, with the first project actually in Cape Town at the [V&A] Waterfront. And if you look, in less than 20 years we’ve grown from one project to now over 100 hotels, as I mentioned.”
“I think what the success for us has been is certainly the brand of Radisson Blu, which has been a key upscale brand in Europe in which, the way Africa is, we see a lot of capital flows moving obviously from some of the source markets where Radisson is already present.”
“So if you look at markets such as central Europe, Radisson is certainly one of the leading players there. And I think that has a lot of relevance. I think in Africa itself we have dedicated [ourselves] to being in most of the capital cities.
“We’re actually present in almost 30 countries out of 54 across the continent, which makes our group the most diverse in terms of presence across the continent. And I think we still believe in it, and we believe in it because there is a lot of diversity that we can [enjoy] in terms of creating local destinations for the domestic market, inter-regionally and certainly internationally, as we have seen with some of our feeder markets.”
What markets are you prioritising at the moment in Africa?
“We established a strategy in the early 2020s in terms of our new five-year expansion plan. As I mentioned, Africa is kind of a big continent. When you look at it, not every country has the same potential in term of expansion.
“We have defined four or five key focus countries. Those include South Africa and Nigeria, Morocco and Egypt.”
“What I mean by ‘focus countries’ is those countries where we can have sufficient scale, in excess of 20 to 25 hotels. And that shows you that easily South Africa will be a country where we can double our current presence over time. And then [for] the rest, it’s kind of what we call a critical mass, kind of creating economies of scale in neighbouring countries. And that would be in term of clustering.”
“So that would be, if we take West Africa, anything from Ivory Coast to Senegal and Cameroon. And if you take the east side, probably Kenya and Tanzania, which we would like to [have more hotels in]. And then on the southern side any countries around South Africa. That is kind of our strategy today. I think those focus countries usually deliver around 60% to 70% of our pipeline. So you can really see the traction of those key focus countries.
“And then, yes, we have also always been bullish on entering new markets. We’re ready to operate in some countries where nobody else is and I think there are new countries that we wish to enter.”
“So we’ll continue this journey, as I mentioned, of diversification across every country and across every brand.”
“For us we still believe in the potential, because initially most of our presence was through Radisson Blu as our kind of five-star property, while now we see a lot of expansion through resorts.”
“The Safari [Hotel] in Hoedspruit is one example, but we also recently opened one in Livingstone in Zambia. And also we see expansion with our four-star brand Radisson, as well as serviced apartments. So I think we have kind of all the tools and development solutions now to grow across every segment and every type of travel purpose.”
Is it difficult to secure and develop hotels specifically in Africa? I ask this question because, according to one of your latest press releases, despite Covid, I thought it was interesting that the group says that the development period for Radisson has been slashed from around seven years to three or four years.
“And, in some instances even less than that. I referred to Livingstone as a project that we actually delivered in less than 24 months, and we have projects that we’ve even done in 12 to 18 months. I think this is part of the strategy that we reshuffled, as I mentioned, in 2020 when I took over the leadership of Africa …”
“I think Africa is one of the continents that is probably the most difficult to develop a hotel in, for two major reasons …”
“One is access to capital. Financing is probably available but often more expensive. And that creates certain questions of viability in some of those projects. And then there is access to construction materials and professional consultants.”
“When you combine those two, it creates an environment where construction costs are very high, and that often delays projects – and some never materialise.”
“That’s why you see the cycles, as you mentioned, of up to seven years. That is because of all the delays that you could expect, but also delays that are sometime caused by lack of transparency, institutional bureaucracy, red tape, and access to licensing permits that might be delayed.”
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“So what we have decided to limit [is] this kind of erosion in the pipeline … One is focusing on conversion. What we call conversion is any project that we can take over … I think that has been one of the key leverages for delivering what we have done in the last 24 months.
“The other side is ensuring that we partner with the right people. I think a lot of people wish to develop properties across Africa, but not everyone realises, as I mentioned to you, the difficulty and the challenge of financing in construction. So for us now we’re more and more strict in ensuring due diligence and ensuring the right partners.”
“And then yes, we are not afraid to take decisions, across some projects that we don’t see moving forward, to just end that partnership. I think that one of the key beliefs of the company is ensuring that we work with the right people.”
What are some of Radisson’s landmark projects [still] to come in South Africa and Africa besides what you’ve already mentioned? I understand JSE-listed Balwin Properties, for example, is looking to have a new Radisson Red hotel at its landmark Munyaka Estate in Waterfall [City] Would Radisson consider taking over the closed Durban Hilton, for instance?
“Obviously we are always active at looking at projects, existing hotels, as I mentioned to you, or even new builds. We do not discontinue our strategy in new builds as much as we are focusing now on conversion.”
“Referring to Durban, last year we just opened our first Radisson Blu in Durban, in Umhlanga. I think that has been a [great] success. You spoke about a landmark. I think this is certainly one of our newest landmarks across South Africa.”
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“In reference to new projects, as I mentioned to you, we believe in the potential of certainly doubling our presence.
I think we are very much present in the key cities of Johannesburg, Cape Town and even Port Elizabeth, which you see as kind of economic cities, whereas now we really want to diversify in secondary cities – being industrial economies or leisure. That includes new types of offerings such as safari, but certainly can include smaller projects catering more to domestic or inter-regional [tourists].”
“So when you look at some of the destinations, one of the learnings that we had from Covid is that South Africa in particular is extremely reliant on international travel. I think that has been a learning where we had to adjust, and that adjustment seems to certainly provide us with the assurance that catering [for] the domestic and intra-regional is extremely important.”
Can we expect other hotel brands within the group coming into South Africa – Radisson Collection, your resort brand, for example?
“Currently the group has nine brands. Not all of them are present in Africa or in South Africa. Speaking about those, Radisson Collection actually is more of an entry-level luxury brand which is present in Africa. We currently have properties in West Africa, and even properties due to open in North Africa. So I think it’s certainly a property type that we would want to enter into in South Africa, but really positioned, as I mentioned, in entry-level luxury.”
“Radisson Blu is our most famous brand, which is entry-level five star which you’ve seen in every key capital city across the continent, and which represents probably 50% of our current presence.”
“In reference to Radisson Red, Radisson Red already exists in two locations in South Africa – in Joburg in the Rosebank district, and the other one in Cape Town at the V&A. So I think those are two successes of that brand very much capturing the lifestyle segment, and I think this is something we still want to expand across different key cities and capitals across the continent.”
“Park Inn? Yes, Park Inn is kind of our mid-scale segment brand which you will see in more secondary economic locations. So very successful. We already have more than 25 properties across the continent and more than 200 worldwide.”
“We will not be introducing the Park Plaza at this stage across the continent, or some of the other brands that we have mostly across central Europe or in Asia Pacific. So I think we have sufficient space to play among those core five brands that I mentioned to you, because they capture every segment from mid-scale to luxury and they capture everything from city to resort to service apartments.”
What about Radisson developments in South Africa that have fallen by the wayside, like the plan for a hotel at King Shaka International Airport and another one in Rosebank?
“Look, the one that you mentioned in Rosebank in Jellicoe Avenue was never a Radisson. So I think that was a wrong media statement, very honestly. So no, at this stage we have only the Radisson Red Rosebank, which is successful.”
“The Park Inn by Radisson that you mentioned at the Durban Airport, yes, was a project. And that is an example of what I mentioned to you – that over time when we realise that things and circumstances may change a project may not continue.”
“This is one project that was discontinued because there was not sufficient comfort on the funding and the capabilities of our partners at that point. So we have no regrets on ending partnerships when we realise that those project will not materialise.”
“I think that’s what really truly differentiates us from other operators because you will often read – and I think it’s important to highlight that point to your audience … that a lot of brands do claim ‘a strong pipeline and strong growth’ across the continent, but 70% of their pipeline never materialises, never opens.”
“And then what we don’t want to create is a fake or false picture of truly what hotel development is in Africa, because it remains challenging …”
Listen to the full episode here.
You can also listen to previous episodes of The Property Pod here.
