Funding main challenge for hotels
Thursday, May 21st, 2020
Funding remains the biggest challenge across Africa for hotel developers, according to Ramsay Rankoussi, Radisson’s new head of development for Africa.
He says the hotel industry in Africa is not big enough to make for a regional priority for global capital.
“Furthermore, financial institutions require a lot of securities, which can create complexity in structuring the right deal,” Rasmsay said in an interview with TopHotelNews.
Most individual investors are willing to walk through each step, but there is a challenge in accessing funding and the network of financial support on the continent is not large enough in most cases for a project to see its completion.
“Costs of financing are usually high and therefore, an operational burden that can be carried on a project and its initial investment may quickly result in questioning the viability of pursuing it or not,” said Ramsay.
The new Radisson man also lamented the fact that not all African countries have local structures to supply world-class professional design teams to ensure proper work. Using foreign experts usually comes at a cost.
“Usually, costs of construction across Africa are the highest globally due to those factors but as we see hospitality becoming a national and regional priority for many African countries, we can expect the professionalisation of the sector and the reduction of the associated costs over time,” he said.
According to Ramsay, Radisson, which is part of Jin Jiang International, holds the record for the fastest hotel construction timeline achieved on the continent, demonstrating our ability to provide relevant brands and open each hotel in the shortest time.
“Being part of Jin Jiang International, the second-largest hotel group in the world in terms of a number of rooms, brings us immense opportunities to access the growing Chinese demand, but also secure new sources of capital and resources relevant to Africa,” he said.
He said the group’s development strategy interlinks to the Chinese sponsored Silk & Belt road initiative.