The New Times (Kigali)

26 January 2013

Rwanda: Budget Hotels the Key to Unlocking Domestic Tourism Potential

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The hospitality industry is reported to be booming in most of the Sub Saharan Africa and governments are positioning their countries to reap the economic benefits that come with such growth. The tourism sector remains a major source of foreign exchange for many countries in the region.

In the past, the emphasis by the hospitality and tourism providers was mainly customised to cater for the needs of the wealthy.

Historically, the development of tourism in Sub Saharan Africa was based on attracting high end tourists. The type who came to the game reserves to see the untainted nature that is synonymous with the African continent. Then, in recent years, as the continent emerged from obscurity, highly rated hotels and conference centres were constructed for leisure vacationers and international events and conferences. Hotels and eateries of this standard cater for the elite and organisations with sizeable budgets. We see this same pattern in the entire housing sector as well.

The growth and expansion of the tourism sector in the continent is symbolised by news of increasing brand name hotel projects in business districts and tourist areas serving the top spending clientele. For example, in South Africa and Kenya where the hotel and catering industries are better developed, some of the world's rich and famous can be spotted in some of the exclusive establishments enjoying their special events and celebrations. Therefore, in the past, the emphasis by the hospitality and tourism providers was mainly customised to cater for the needs of the wealthy.

However, in today's global economic meltdown and Eurozone panic, this is no longer the case. A mix of tourists and travellers of different income levels are coming to Africa. Big and smaller foreign companies as well as individuals and humanitarian organisations are watching their expenditures like never before. For many, the days of thoughtless spending are over; companies are altering spending patterns and per diems for travelling employees are tightly controlled.

Also, in order to diversify and increase tourism revenue, Africa has embarked on a campaign to promote domestic tourism where nationals are encouraged to visit and enjoy the attractions within their national and regional boundaries. These domestic tourists who travel with their families seek to enjoy the best of what the country has to offer while watching what they spend. Within this category of domestic tourism are also nationals residing in the diaspora who make periodic pilgrimages to their homelands. If they are flying in using low budget carriers, they are not likely to pay for the frills of a luxury hotel. They are simply looking for a safe, clean and comfortable place to stay.

On that basis, investments in the budget hotel sector will be a piece of the tourism equation for the foreseeable future. In fact experts agree that budget hotels are the key to unlocking the potential of domestic tourism worldwide. Budget and mid-market hotels represent a huge opportunity for growth in Africa according to Howarth HTL, the world's largest hospitality consulting network. Smaller establishments tend to perform better throughout the year since their services are not strictly seasonal. There are times when budget hotels enjoy higher occupancies while high end establishments struggle for business. Gaurav Bushan, Chief Investment Officer for Accor, Asia division said that some banks take a much more positive view financing budgetary hotels than luxury hotels.

A list of international budget hotels include Travelodge, Comfort Inn, Sleep Inn, Motel 6, Best Western, Days Inn, some of which are divisions of brand hotel conglomerates such as InterContinental Hotels, Starwood, Hilton and Marriott. When announcing the launching of the budget brand hotel concept in Africa, the UK based African Investment Company Lonrho stated that the low-cost value hotel market in Africa is currently underdeveloped although it is the fastest growing sector globally. It is also important to note that African investors have played a major role in providing cheap hotel accommodation although many lack proper management, professional service and product standardisation.

The fine line between offering guests what they want and what they can pay for must always be at the forefront of the hotel and tourism development. Therefore, what is needed is to know how to service the new budget traveller.

The writer is an experienced hotelier and tourism professional

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