Former Rezidor and Faircity hotel executive Mark Wernich recently joined Preferred Hotels & Resorts in Cape Town, which is where editor Dylan Rogers caught up with him at WTM Africa, as the pair discussed the Preferred model and where the group sees opportunity in Africa.
If you’re not ‘in the industry’ and don’t have a fairly extensive knowledge of the international hospitality market, you probably won’t be aware that Preferred Hotels & Resorts – based out of the United States and representing some of the world’s standout hotels – has been around nearly 50 years.
That’s arguably because it’s not a ‘standard’ hotel group, owning bricks and mortar and/or offering its services as a hotel management company.
“We’re not a management company and we don’t operate hotels,” says Wernich. “We look to synergise with our hotel partners and push business to them.”
Preferred Hotels & Resorts is what the hospitality industry likes to call a ‘soft brand collection’ and a global portfolio of independent hotels. Member hotels get access to Preferred’s expertise and support services, such as distribution, reservation management, loyalty, and sales and marketing, while still maintaining their individuality.
“The owners want that status and that independence, and don’t want to be dictated to,” says Wernich. “In that way they keep their identity, which is important.”
All of the hotels, resorts, and serviced residences within the Preferred Hotels & Resorts portfolio are independent entities, and the organization’s quality standards are measured by yearly anonymous on-site inspections and real-time quality assessment scores pulled from social media sites.
Currently, Preferred Hotels & Resorts has 28 African properties in its portfolio, with another 25 in the pipeline. The existing African properties can be found in some of the continent’s most prominent business travel destinations, such as Luanda, Accra, Nairobi, Dar es Salaam, and Lagos.
No surprise, then, to hear that Preferred is betting big on Africa, with Wernich’s appointment just one element in a re-structure that is set to beef up the group’s presence on the continent.
“Everyone knows that Africa is growing at a rate of knots,” says Wernich. “It takes a bit longer to get things done, but we all know that the (hotel) pipelines are massive. We know that by 2020/2030, Africa is going to be huge if you look at the growth of some industries, such as mobile, oil and gas etc.”
That may be the case, but there’s no doubt that some of the continent’s biggest economies – Nigeria, South Africa, Kenya – are hardly shooting the lights out currently, in terms of economic performance.
“The key is that we’re in African markets, we know it’s going to happen, and we’re as patient as the owners,” says Wernich. “That is Africa – changes in government, laws etc, so things change all the time. You must be tough enough to exist in that environment.”
Preferred may be tough, but what about the African hotel owner who can’t get the rate he wants and is staring poor occupancy in the face?
“The difference with us is that we push business to the hotels,” says Wernich. “There is a fixed fee component that puts the hotel on our platform. However, if we don’t push business, we don’t make money.”
So, where next in Africa?
“We’ve got some things going on in Kenya and Angola, and we’re looking at Zanzibar, Mauritius, and then here in South Africa, with Johannesburg and Durban,” says Wernich. “They are key to us and we believe there is opportunity, mainly due to the economy being strained and the different model we offer.”
In 2015 Preferred Hotels & Resorts rebranded, with five distinct hotel collections: Legend, LVX, Lifestyle, Connect, and Preferred Residences. The group has traditionally been strong in the luxury sector, but the portfolio of brands allows it to present an offering across the star range.
That could well prove useful in Africa, where the mid-market sector remains largely under-serviced.
“There is definitely opportunity there,” says Wernich. “That’s why we have the five brands and specifically the Connect brand in the mid-market space. The luxury space is probably a bit over-traded, and with the economies as they are currently, ADR’s are not being achieved. However, there is enough space from the lower end up to the luxury market.”
And plenty of space to grow, no doubt.