Rezidor Hotel Group: One of the world's fastest growing hotel chains

Africa Outlook talks with Rezidor Hotel's Andrew McLachlan who charts the rise of one of the world's fastest growing hotel chains.



By Ian Armitage


The Rezidor Hotel Group is one of the world's fastest growing hotel chains. Since 1994, the number of rooms has increased tenfold and Rezidor now has a portfolio of over 420 hotels in 64 countries across Europe, the Middle East and Africa.

You could say success has come quickly – and compared to its competitors that is certainly true.

"It is a remarkable tale," says Andrew McLachlan (pictured), VP for Africa & the Indian Ocean Islands, who established the Rezidor Africa development office in Cape Town in 2007.

According to McLachlan, around 40 percent of the group's total hospitality offering in operation is in the emerging markets of Africa, the Middle East, Russia and CIS ..

"What's more, of the 100 plus hotels or 20,000 rooms in the pipeline 75 percent is in the emerging markets of Africa, the Middle East, Russia and CIS," he says.

And it is set to grow.

"Africa is a strategically important market, very much so," McLachlan adds. "As the mature markets of the West become increasingly saturated, this is where we sees our future."

McLachlan's task is clear: grow Rezidor's presence on the African continent. He says that will be achieved by growing and consolidating the position of Radisson Blu and Park Inn by Radisson – two of Rezidor's major brands.

"As far as Africa is concerned, I'm convinced that the opportunity is wide open," he says.

"There is clear recognition that this is where our future focus should be.

"The new hotels currently under development will be located in the capitals or financial hubs of these economies.

"The Rezidor Hotel Group is one of the world's fastest growing hotel chains, and a strong presence in emerging markets is viewed as critical to long-term success," he explains.

Over the last 48 months, McLachlan's office has added 34 new hotels to the portfolio.

"The goal is to grow quickly," he says.

Rezidor's story is all the more remarkable when you consider that, in the early years, growth in Africa was slow.

Unlike established competitors such as Intercontinental, Sheraton or Hilton, Rezidor did not open its first hotel in Africa until 2000.

However, McLachlan says, a shift in executive board strategy in 2006 saw the group focus on creating a "locally-driven, de-centralised structure" and a strong management presence on the ground in Africa.

"I think we were the first international hotel group to open a development office for Africa in Africa and that was a masterstroke by Kurt Ritter, President & CEO of Rezidor, who really drove that idea.

"Having local people on the ground who understand the market helped us gain an advantage for sure."

In May, The Rezidor Hotel Group announced that two new Park Inn by Radisson hotels would be built in Africa: The Park Inn Nairobi Westlands, Kenya, and The Park Inn Polokwane in South Africa.

The Park Inn Polokwane in the South African province Limpopo will feature 160 rooms and is scheduled to open in Q1 2013.

The Park Inn Nairobi Westlands in Kenya will add 126 rooms to Rezidor's pipeline and welcome the first guests in Q4 2013.

"Africa is one of our key markets for future business development," says McLachlan. "Africa is an emerging continent and offers huge natural resources, improved infrastructure and increasingly stable economies and governments. At the same time it lacks internationally branded hotel rooms or has a dated hotel inventory.

"Nairobi definitely meets our growth strategy requirements and underlines how important East Africa is for our further development in key cities and resort destinations. We see a promising potential in this region and are glad to be present in Nairobi, East Africa's commercial and aid hub."

The hotel will follow a Radisson Blu Hotel featuring 256 rooms located in Upper Hill, the upscale new financial and business district of Nairobi, which is under development, McLachlan says.

The hotel is scheduled to open soon, he adds.

"From the wildlife to the nightlife, Nairobi is a city unlike any other," McLachlan explains.

The Park Inn Polokwane, meanwhile, is Rezidor's third Park Inn by Radisson hotel in South Africa, following Sandton, Johannesburg and Cape Town.

Polokwane is a major economic centre and the hotel is seen as "strategically important" for Rezidor.

"Its proximity to the neighbouring countries of Botswana, Zimbabwe, Mozambique and Swaziland, as well as a convenient distance from Kruger National Park make it the ideal regional gateway to South Africa," McLachlan says.

The brand new property will be located alongside Polokwane Golf Course and across the road from the Peter Mokaba Sports Stadium.

The International Airport will be 7km away.

Besides 160 modern and comfortable guest rooms, the hotel will offer a signature RBG grill restaurant, 580 square meters of meeting facilities, a gym, an outdoor swimming pool, and ample parking.

"South Africa offers considerable development opportunities for our young and dynamic mid market brand Park Inn by Radisson. We aim to enter all nine provincial capitals in the future in addition to the larger cities of Johannesburg, Cape Town and Durban," McLachlan says.

Rezidor has a very flat management structure, which means that reaction times and decision-making are fast and streamlined.

McLachlan sees this as a one of the reasons behind the firm's success.

Another unique advantage held by Rezidor is its ability to access capital, he says.

Funding is critical to the success of hotel development, but can be seen as particularly risky in new, untested markets.

Several years ago Rezidor founded AfriNord Hotel Investments, which is an equal partnership between Rezidor and four Nordic government development agencies, which, says McLachlan, it uses "on a case-by-case basis" if funding is needed.

"It means we can provide mezzanine debt funding, which is a competitive advantage," he explains.

Globally, Rezidor manages a portfolio of three hospitality brands, each designed to capture a distinct segment of the market.

"When we opened our Africa office in 2007, we had a 2015 target of 50 hotels open or under development," McLachlan concludes. "That target has already been moved forward by three years to 2012, when we will have surpassed our original goal.

"This is a very exciting time for us," he adds.

Image: Supplied





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