Funding remains biggest challenge for hotel development in Africa: Ramsay Rankoussi

by | 05 Apr 2020 | Experts

Ramsay Rankoussi, Vice President, Development – Middle East, Turkey & Africa, Radisson Hotel Group.

As hospitality becomes a priority for many African countries, we can expect the sector to continue evolving and see hotel development costs reduce over time, says Ramsay Rankoussi, Radisson’s new head of development for Africa. 

Meet Ramsay Rankoussi: the Radisson Hotel Group’s new head of development in Africa.

The multilingual, multicultural Belgian national has his work cut out for him. Tasked with increasing Radisson’s Africa hotel portfolio and footprint, Rankoussi underlined his commitment to the region and promised to be not only a catalyst of growth for the industry but also a creator of employment for the continent.

In an interview with TOPHOTELNEWS, Rankoussi added that being part of Jin Jiang International, the second largest hotel group in the world in terms of number of rooms, means that Radisson has immense opportunities to access the growing Chinese demand and secure new sources of capital and resources relevant to Africa.

What are the challenges in Radisson’s hotel development in Africa?

Rankoussi: Funding remains the biggest challenge across the continent as our industry is still not a regional priority and banking institutions require a lot of securities which can create complexity in structuring the right deal.

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.

A lot of individual investors are willing to walk through each step, but the lack of accessibility and of a large network of financial support often create further obstacles for a project to see its completion.

Also, in order to ensure proper work, each project requires a professional design team and not every country across the continent has the local structure and this often requires foreign assistance which equally 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.

Which cities show potential for hotel development in the future?

Rankoussi: We have created a dual approach in regards to our growth strategy across the continent. One part is on focus countries and the other part is about creating clusters; both resulting in critical mass and a scale strategy.

Our focus countries which represent the largest individual scale are Morocco, Egypt, Nigeria and South Africa. In addition to those key countries, we have implemented a cluster approach in both development and operations to ensure synergies among neighbouring countries and further create value for our hotels.

The targeted clusters where we focus on growing in priority are the Maghreb; West Africa with Senegal and Ivory Coast; Central Africa with Cameroon, DRC and Republic of Congo; East Africa with Ethiopia, Kenya and Tanzania and finally specific countries within the Southern African Development Community such as Angola, Mauritius, Mozambique and Zambia.

What are the design principles driving Radisson’s expansion in Africa?

Rankoussi: Our technical priority is to remain relevant to our business partners and offer adequate construction solutions for each of our brands. We have reviewed our brand offering and have created a clean and simple brand architecture from economy to luxury, and from resorts to business hotels while also offering serviced apartments solutions.

Our technical team has produced comprehensive brand guidelines allowing us to further accelerate the speed of construction, minimize overall time to build but we have also considerably reduced the cost of development of each brand, making us one of the most competitive companies with relevant resources adding value to our investors.

Another key success factor has been our ability to surround ourselves with the right technical team on both sides, ensuring a group of experts dedicated to minimize any risks but also translating value engineering in every single project with the priority of completion.

We hold the record across the continent with the fastest construction timeline achieved with the Radisson BLU Niamey which recently opened; Radisson RED Cape Town or Radisson BLU Hotel & Convention Center in Kigali among others, further demonstrating our ability to provide relevant brands and open each hotel in the shortest time.

Radisson’s key message to hotel investors and owners

Rankoussi: The first message is our commitment to the region and to be a catalyst of growth for the industry but also a creator of employment for the continent.

The relevance of our brands along with tailored development solutions have been ingredients to our success and we believe future investors can equally leverage on the competitive advantage our brands provide with a lower cost of development and a faster timing to completion.

Finally, now being part of Jin Jiang International, the second largest hotel group in the world in terms of 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. Our new shareholder has brought further synergies and economies of scale and we certainly look at working closer how we can unlock more value.

Furthermore, our development strategy interlinks itself closely to the wilder Silk & Belt road markets established by China and we believe this can certainly accelerate our growth journey across Africa but also provide key solutions for our partners and investment community.

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