Long distance relationships

International hotel management companies have had their fair share of the South African hotel management contract pie for more than a decade. The major players stepped in to our arena more than a decade ago as many operators were keen on the South African market. Asian, European and American hotel management companies have joined the ‘Scramble for Africa’, resulting in an urgency to get deals signed and share of the market secured. Major hotel groups jumped on the bandwagon, culminating in the Marriott purchase of the Protea Group last year.

I was recently invited to participate in a panel discussion at the Hotel Investment Conference Africa held in Johannesburg. The ability of international versus local hotel operators was a hot topic as we now see so many international operators looking further afield in Africa for hotel management contracts, prompting the question: should hotel owners be looking at local or international operators?

Naturally, the salesman in me immediately responds “go with a local operator”!  However, when considered carefully, the argument for the ‘local operator’ is a convincing one. Any good hotelier will confirm that knowledge of the local market is paramount. Our recent move into Namibia and West Africa has got me beating the drum for local operators. (South) African companies can and are succeeding in Africa. We certainly don’t need to step aside for larger international companies who are tapping into this new and very exciting market.

Africa is not about monopoly or owning the market. Africa is about knowledge of the market, appreciating a 3000 year legacy of how things work, understanding challenges and differences in doing business, and most importantly, appreciating earned relationships.
What we do know is that local companies have an edge on international counterparts for obvious reasons. There are no language or time zone issues hindering communication; a local office offers hands-on service as proximity eliminates the challenge of distance; local staff develop relationships with other staff and management resulting in ease and fluency of conducting business and making decisions; a local team will be sensitive to and understanding of cultural diversity as well as having knowledge of the local infrastructure, political climate, risk and challenges.

Understandably, the top projects are developed and funded by the giants in the industry who are building the mega-projects of 500-600 room properties. These guys come with a heavy infrastructure, global systems, bulk international procurement, identifiable clout, and expatriate staff (although very expensive), all very important in the economic scale of development and growth.

My argument, though, is this: there is a lot to be said about having people on the ground, a regional office that is close to the pulse, employing local people at a high level with local know-how, sourcing local goods and developing the local community.
To operate a hotel from another part of the world is not the perfect solution: how much value is being added, and at what expense? We need to deliver the right product to the right market at the right time. How are we going to get that right from a desk in another part of the world?  A long distance is simply not advantageous.

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