Hilton Hotels & Resorts has a healthy African development pipeline of 52 hotels, and the group plans to enter 14 new countries over the next five years. So, there was much to discuss when editor Dylan Rogers sat down in Durban with Hilton’s President of Middle East, Africa and Turkey, Rudi Jagersbacher, Vice-President of Africa & Indian Ocean, Jan van der Putten, and Vice-President of Development for Sub-Saharan Africa, Mike Collini.
Context is everything, and it’s always a good idea to have it, particularly when dealing with numbers.
In the case of Hilton Hotels, those numbers are already significant, with the group now operating 5,300 hotels globally, having opened – roughly – a new hotel every day in 2017. According to Jagersbacher, 2,300 hotels – across the group’s 14 brands – are currently being built, and the African continent is a big part of Hilton’s development story.
To that end, 2017 saw the group move Collini from Istanbul to Cape Town, to bolster its development efforts.
“Growth for Africa is very important, and we have to out-perform the competitors to ensure we get new deals on an ongoing basis,” says Jagersbacher. “We also have to evaluate each location in terms of their different needs, and we have to recognise the trends. Not everyone wants luxury, yet everyone wants to travel, and they want good deals.”
That’s one of the reasons why the Hilton Garden Inn brand – the group’s mid-market or ‘focused services’ brand – is set to play a big role in Hilton’s African growth.
“I think Hilton Garden Inn is going to grow to be the biggest over time,” says Collini. “When I identified 200 strategic targets across Sub-Saharan Africa, almost a hundred of those were with Hilton Garden Inn. The reason for that is that it’s a highly effective and cost-efficient model. In terms of cost-per key, it’s almost half of that of a Hilton-branded property.”
No surprise, then, that three of the five projected Hilton openings in Africa in 2018 are Hilton Garden Inn hotels. The first is expected to open in Lusaka, Zambia in July, followed by a property in Mbabane, Swaziland, and the Hilton Garden Inn Gaborone in Botswana towards the end of the year.
“You have to go with what the market dictates, and most of these markets are showing that Hilton Garden Inn is the right brand – the most profitable and the one with the best returns,” says Collini.
In and around those HGI openings, Hilton plans to open its first Curio Collection by Hilton on the continent in July, followed by its second African DoubleTree by Hilton conversion. The Curio Collection property is adjacent to Murtala Muhammed International Airport in Lagos, whilst the DoubleTree is in Kigali, Rwanda, and is part of the Hilton African Growth Initiative, which was unveiled in October. HAGI will see Hilton spend $50m across approximately a hundred hotel conversions in Africa over the next five years, working with independent owners to convert their properties to a Hilton brand.
“DoubleTree has been our most successful conversion brand, and that’s down to its flexibility, in terms of room size and facilities,” says Collini. “Providing we can get an upscale positioning and look and feel, then, in theory, anything can be a DoubleTree. It’s positioned just below Hilton as an upscale brand.”
Collini says Curio Collection by Hilton, which is a ‘soft brand’ and predominantly intended for unique, independent hotels that are established in their markets, will be the other brand front of mind, when it comes to these conversion properties, which will ultimately benefit from Hilton’s global distribution system, reservations, digital platform, and Hilton Honors programme.
“Those are the two we see, but there’s nothing stopping a property from converting to a Hilton or a Hilton Garden Inn, although we expect the bulk to be DoubleTree and Curio Collection,” he says.
The Hilton African portfolio is currently made up of 42 hotels, with 52 under construction or in the design phase, meaning the next few years, in which Hilton will go into the likes of Tunisia, Uganda, the Democratic Republic of Congo and Ghana for the first time, will probably see the group near the 100-mark, in terms of hotels in Africa.
“From a growth perspective, the opportunity in Africa is enormous,” says Van der Putten. “There are 54 countries and it’s a huge geographical space – bigger than China – and with more people.”
That being said, HAGI is probably the game-changer for Hilton and is just ramping up the group’s development efforts, as Collini acknowledges.
“That is where we are really accelerating our growth.”